Volume 03 Issue 07-2023
1
International Journal Of History And Political Sciences
(ISSN
–
2771-2222)
VOLUME
03
ISSUE
07
P
AGES
:
01-04
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
6.
713
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
This article explores the relationship between fiscal illusion, progressive taxation, and retrospective voting in the
context of political decision-making. Fiscal illusion refers to the phenomenon where taxpayers are deceived or misled
about the true cost and impact of government policies, particularly regarding taxation. Progressive taxation, on the
other hand, is a system that imposes higher tax rates on individuals with higher incomes. Retrospective voting occurs
when voters evaluate the performance of incumbents based on past outcomes rather than future promises. By
examining these three concepts together, this article aims to shed light on how fiscal illusion may influence support
for progressive taxation and how retrospective voting can shape tax policies.
KEYWORDS
Fiscal illusion, progressive taxation, retrospective voting, tax perception, tax policy, cognitive biases, political decision-
making.
INTRODUCTION
The concept of fiscal illusion has garnered increasing
attention in political and economic research. It refers
to the cognitive biases and misperceptions that
individuals may have regarding government policies,
particularly those related to taxation. In this article, we
delve into the connection between fiscal illusion,
progressive taxation, and retrospective voting. By
understanding these interrelationships, we can gain
insights into the dynamics of public opinion and
decision-making in the realm of taxation. Taxation is a
fundamental
aspect
of
government
revenue
generation and economic redistribution. However, the
Research Article
FISCAL ILLUSION AND PROGRESSIVE TAXATION WITH RETROSPECTIVE
VOTING
Submission Date:
June 21, 2023,
Accepted Date:
June 26, 2023,
Published Date:
July 01, 2023
Crossref doi:
https://doi.org/10.37547/ijhps/Volume03Issue07-01
Roberto Abatemarco
Department of Economics and Statistics, Celpe, University of Salerno, Salerno, Italy
Journal
Website:
https://theusajournals.
com/index.php/ijhps
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Volume 03 Issue 07-2023
2
International Journal Of History And Political Sciences
(ISSN
–
2771-2222)
VOLUME
03
ISSUE
07
P
AGES
:
01-04
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
6.
713
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
perception and understanding of tax policies among
taxpayers can be influenced by various cognitive
biases, resulting in what is known as fiscal illusion. This
phenomenon obscures the true cost and impact of
taxation, potentially shaping public support for
different tax systems, such as progressive taxation.
Furthermore, voters' evaluation of incumbents based
on past outcomes, known as retrospective voting, can
also play a role in shaping tax policies. This article aims
to delve into the relationship between fiscal illusion,
progressive taxation, and retrospective voting,
shedding light on how cognitive biases and voter
behavior interact to influence tax policy decisions. By
unraveling this veil of fiscal illusion, we can gain
valuable insights into the dynamics of public opinion
and political decision-making surrounding taxation.
METHODS
To explore the relationship between fiscal illusion,
progressive taxation, and retrospective voting, a
mixed-method approach was employed. Firstly, a
comprehensive review of existing literature on fiscal
illusion, progressive taxation, and retrospective voting
was conducted. This involved analyzing academic
papers, scholarly articles, and relevant empirical
studies. Secondly, quantitative analysis was performed
using survey data collected from a representative
sample of voters. The survey included questions on tax
perceptions, preferences for tax policies, and
retrospective voting behavior. The data was analyzed
using statistical techniques such as regression analysis
to identify correlations and associations.
RESULTS
The analysis of the literature revealed that fiscal illusion
can play a significant role in shaping public support for
progressive taxation. When taxpayers are subject to
fiscal illusion, they may underestimate the true burden
of progressive tax systems. This underestimation can
result from complex tax structures, hidden taxes, or
perceptual biases. Consequently, taxpayers may be
more likely to support progressive tax policies, as they
perceive the tax burden to be lower than it actually is.
However, it is important to note that the impact of
fiscal illusion on tax preferences can vary depending on
factors such as income level, education, and political
ideology.
The quantitative analysis of survey data provided
further insights into the relationship between fiscal
illusion, progressive taxation, and retrospective voting.
The findings revealed that individuals who experienced
a higher degree of fiscal illusion were more likely to
support progressive tax policies. Additionally,
retrospective voting played a significant role in shaping
tax policy preferences. Voters tended to evaluate the
performance of incumbents based on past economic
outcomes, including the perceived impact of taxation.
This suggests that retrospective voting can influence
tax policy decisions, potentially leading to shifts in tax
rates and structures.
DISCUSSION
The findings of this study highlight the importance of
understanding fiscal illusion and its implications for tax
policy and democratic decision-making. By recognizing
the existence of fiscal illusion and its potential
influence on support for progressive taxation,
policymakers can design more transparent tax systems
and engage in effective communication to mitigate
cognitive biases. Moreover, the role of retrospective
voting in shaping tax policies calls for a deeper
understanding of how past outcomes affect voter
behavior. This knowledge can inform political
campaigns and policy formulation
processes,
ultimately leading to more informed and rational
decision-making.
Volume 03 Issue 07-2023
3
International Journal Of History And Political Sciences
(ISSN
–
2771-2222)
VOLUME
03
ISSUE
07
P
AGES
:
01-04
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
6.
713
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
CONCLUSION
In conclusion, this article has explored the intricate
relationship between fiscal illusion, progressive
taxation, and retrospective voting. The findings have
demonstrated the significant impact of cognitive
biases and voter behavior on tax policy decisions.
Fiscal illusion, the cognitive bias that obscures the true
cost and impact of taxation, has been found to shape
public support for progressive taxation. When
taxpayers underestimate the burden of progressive
tax systems due to complex structures or perceptual
biases, they may be more likely to endorse such
policies. This underscores the importance of
transparency and effective communication in tax
systems to mitigate fiscal illusion and promote
informed decision-making.
Additionally, retrospective voting has emerged as a key
factor influencing tax policy preferences. Voters tend
to evaluate incumbents based on past economic
outcomes, including the perceived impact of taxation.
This highlights the need for a deeper understanding of
how past outcomes shape voter behavior and
underscores the role of policy outcomes in electoral
dynamics.
By unraveling the veil of fiscal illusion and
comprehending the influence of retrospective voting,
policymakers and researchers can contribute to more
informed and rational tax policy decisions. This calls for
transparent tax systems, clear communication about
tax implications, and efforts to enhance public
understanding of tax policies.
Overall, recognizing the interplay between fiscal
illusion, progressive taxation, and retrospective voting
is crucial for promoting fair and effective tax systems.
By shedding light on these dynamics, this article
contributes to the broader understanding of the
complexities involved in tax policy and political
decision-making. Future research should further
explore these concepts, examining additional factors
and contexts to refine our understanding of their
interrelationships and implications.
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Volume 03 Issue 07-2023
4
International Journal Of History And Political Sciences
(ISSN
–
2771-2222)
VOLUME
03
ISSUE
07
P
AGES
:
01-04
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
6.
713
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
9.
Slemrod, J. (2007). Cheating ourselves: The
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Weingast, B. R. (1984). The congressional-
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