Weekend Wall Street Journal, Are We Hardwired to Love Taxes?, by Jonah Leher:
It’s no secret that nobody enjoys paying taxes. The real question is how much of the bitter medicine we can tolerate—and what our society needs. This is especially clear when Congress debates changes in the tax code, like the current controversy over whether to renew the 2003 Bush tax cuts. Though both parties want to keep the cuts for households making less than $250,000 a year, Republicans want to retain the cuts for richer households, so that the wealthiest Americans also get to keep an extra 4% of their income.
The conservative argument is straightforward: The tax increase will make the rich feel poorer, which will lead to a reduction in consumption and investment. Given the fragility of the economic recovery, that’s a dangerous possibility.
But will this happen? How do the wealthy actually respond to the redistribution of wealth? These questions are politically relevant, of course, but they also cut to the core of an ongoing debate about human nature. We typically see ourselves as selfish creatures, driven by our genes to maximize pleasure. We don’t like taxes because they leave us with less to spend on ourselves.
In recent years, however, psychologists and neuroscientists have begun dismantling this view of human behavior. We may not be altruistic angels, but neither are we depraved primates. One of the most surprising findings is that people have a natural aversion to inequality. We tend to prefer a world in which wealth is more evenly distributed, even if it means we have to get by with less. …
[S]cientists speculate that people have a natural dislike of inequality. In fact, our desire for equal outcomes is often more powerful (at least in the brain) then our desire for a little extra cash. It’s not that money doesn’t make us feel good—it’s that sharing the wealth can make us feel even better. …
For too long, our political conversation about taxes and wealth has been framed by a set of misguided assumptions. We’ve assumed that people always want to be wealthier than their peers, that higher taxes are an inevitable source of displeasure. But that’s not the case. As the scientists note, culture and context play a decisive role, which is why different countries have such different tax structures, and why even America had a top marginal tax rate of 91% in 1960.
Though neuroscience can’t speak to the merits of this public policy debate—economists continue to argue about the impact of taxes on the economy—it should remind us that our response to financial rewards and losses depends on a larger set of shifting beliefs. Do we believe that our riches are deserved? Is America still a land of opportunity? Those are the questions that matter.
