Pandemic and Progressivity

IMF Working Papers, February 5, 2021

Source details

Based on a survey of about 2,500 US resident adults, people who have experienced serious illness or job loss caused by the COVID-19 pandemic, or who personally know someone who has, favor a temporary progressive levy or structural progressive tax reform to a greater extent than others in the sample, controlling for income, demographic characteristics, and other factors.
Individuals who reveal preferences for spending items associated with communitarian moral perspectives (more on police, military, border protection; less on education, health, environment) generally show weaker support for progressive reforms.
More communitarians change their views as a result of personal experience with pandemic-related illness or job loss.
The results are consistent with previous findings that economic upheavals can mold individuals’ views on policy matters.

Survey sample size: about 2,500 US resident adults.
Controlled for: income, demographic characteristics, and other factors.
Focused policy options examined: temporary progressive levy and structural progressive tax reform.
Behavioral correlate examined: preferences over spending items (police, military, border protection; education, health, environment) as proxies for communitarian versus universalist moral perspectives.

Personal experience of pandemic-related economic or health shocks is associated with increased support for progressive taxation options (temporary levy or structural reform).
Moral perspectives on public spending structure (communitarian vs universalist) mediate baseline support for progressive reforms, but personal experience can alter these positions, especially among communitarians.
Implication: economic upheavals like the COVID-19 pandemic can shift public attitudes toward redistribution and tax progressivity, suggesting windows for policy change following large shocks.