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What Taxes Leave People the Happiest?

People who live in societies where incomes face progressive tax rates, a new study shows, report higher levels of happiness than people who live in flatter tax systems.

Two decades ago, after the Soviet Union’s collapse, various conservative groups from the United States rushed into Eastern Europe. These eager advocates for free-market fundamentalism set out to imprint on impressionable new nations all sorts of public policies they couldn’t get enacted into law back home.

On taxes, these American right-wingers hit the jackpot. A host of Eastern European nations would quickly adopt “flat tax” systems that taxed people with high incomes and people with much lower incomes at the same exact rate.

How’s this flat taxing working out? Pollsters recently put that question to flat-taxed Czechs. Two-thirds of the Czech people, the poll found, “consider the current single rate of 15 percent unjust.” An even greater proportion of the Czech population, almost 75 percent, want to see a return to progressive tax rates — that is, tax rates that rise as income rises.

These poll results won’t surprise psychologists Shigehiro Oishi, Ulrich Schimmack, and Ed Diener. The three scholars have just completed a 54-nation comparative study that explores whether the shape of a nation’s tax system can impact the happiness of its people.

Their conclusion? People who live in societies where incomes face progressive tax rates report higher levels of happiness — or “subjective well-being,” in the technical phrase — than people who live in flatter tax systems.

‘A fair redistribution of wealth via progressive tax increases the mean happiness of the nation.’

“If the goal of societies is to make citizens happy, tax policy matters,” explains the University of Virginia’s Shigehiro Oishi. “Certain policies, like tax progressivity, seem to be more conducive to the happiness of the people.”

Oishi, the University of Toronto’s Ulrich Schimmack, and veteran University of Illinois happiness analyst Ed Diener conducted their research within a database of 59,634 Gallup interviews. They measured happiness by three different yardsticks.

Their findings, the three report, show “that a fair redistribution of wealth via progressive tax increases the mean happiness of the nation.”

In other words, the researchers sum up, policy makers need to see tax policy as something much more than a matter of “economic measures.” Tax policy impacts how people feel about their “everyday lives.”

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  • Reality Check

    You people don’t know what you’re talking about. I sure as hell would sit on my ass and get paid if I didn’t have to work. Why should I work when a bunch of lazy people want the same amount as those who work hard?

  • http://profiles.google.com/dhfabian DH Fabian

    Reality check, please check reality.  Virtually anyone who has been without a job for some period of time — even if they had another means of survival — can tell you how miserable it is. Our jobs are central to the structure of our lives, very important to our social lives/”connectedness” with people in general, and absolutely essential to one’s sense of self-worth. The only people today who are lazy are the richest. Those who aren’t working are doing something even harder — enduring the hellish struggle to find a job that’ll pay enough to cover the rent.

  • wintercow20

    Cool – so from this can you also hold the belief that Americans must be among the happiest people on Earth?

    Two other questions: using econometrics, can you explain how you can extrapolate cross-sectional findings into the panel (e.g. average wages in the US south are lower, but when a Northerner MOVES to the South, does that mean her wage will fall?)

    And, what has been the record of growth and government performance in those flat tax countries? 

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    The way some people talk, you’d think that a flat tax system—in which
    everyone pays at the same rate regardless of income—would make citizens
    feel better than more progressive taxation, where wealthier people are
    taxed at higher rates. Indeed, the U.S. has been diminishing
    progressivity of its tax structure for decades.

    But a new study comparing 54 nations found that flattening the tax
    risks flattening social wellbeing as well. “The more progressive the tax
    policy is, the happier the citizens are,” says University of Virginia
    psychologist Shigehiro Oishi, summarizing the findings, which will be
    published in an upcoming issue of Psychological Science, a
    journal of the Association for Psychological Science. Oishi conducted
    the study with Ulrich Schimmack of the University of Toronto at
    Mississauga and Ed Diener, also at University of Illinois and the Gallup
    Organization.

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    For 2011, the employee portion of social security tax has been reduced
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    this change into account. This change does not change the employer
    portion of the social security tax. In addition, the payroll tax cut has
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  • http://www.kindercube.com/ Perlengkapan Bayi

    TAX REVIEWER
    GENERAL PRINCIPLES:BY: Rene Callanta
    DEFINITION OF TAXATION
     Taxation is the inherent power of the sovereign, exercised through thelegislature, to impose burdens upon the subjects and objects within its jurisdiction,for the purpose of raising revenues to carry out the legitimate objects of the government.

  • http://www.no1-office.com/about-us.html Mesin Fotocopy

    should, subject to tax only the rich people.

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