People happier with progressive tax system

Sept. 10, 2011 at 1:23 AM
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CHARLOTTESVILLE, Va., Sept. 10 (UPI) -- The diminishing progressivity of the U.S. federal tax code since the 1950s may account for some feeling less happiness, U.S. and Canadian researchers suggest.

Shigehiro Oishi, a University of Virginia psychologist, Ulrich Schimmack of the University of Toronto and Ed Diener of the University of Illinois and the Gallup Organization, analyzed the relationship between tax progressivity and personal well-being in 54 nations surveyed by the Gallup Organization in 2007 -- involving a total of 59,634 respondents.

Well-being was expressed in people's assessments of their overall life quality from "worst" to "best possible life," on a scale of 1 to 10, and of whether they enjoyed positive daily experiences such as smiling, being treated with respect and eating good food -- or suffered negative ones, including sadness, worry and shame. The analysis looked at participants' satisfaction with their nation's public goods, from schools to clean air.

The degree of progressivity was measured by the difference between the highest and lowest tax rates, corrected for such confounding factors as family size, social security taxes paid and tax benefits received by individuals.

The study, scheduled to be published in Psychological Science, found, on average, residents of the nations with the most progressive taxation evaluated their own lives as closer to "the best possible" and reported having more satisfying experiences and fewer discomfiting ones than respondents living in nations with less progressive taxes.

Oishi says the happiness was "explained by a greater degree of satisfaction with the public goods, such as housing, education and public transportation."

"If the goal of societies is to make citizens happy, tax policy matters," Oishi says in a statement. "Certain policies, like tax progressivity, seem to be more conducive to the happiness of the people."

In 1944, the top U.S. tax rate was 94 percent, in 2010, it was 35 percent.

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