The Widening Gap in Tax Attitudes: Role of Government Trust in the post COVID-19 period

TL;DR

This paper examines how the COVID-19 pandemic shifted Japanese citizens' support for income redistribution from norm-based to trust-dependent, highlighting a growing reliance on institutional trust for social cohesion post-crisis.

Contribution

It reveals a transition in tax attitude support from unconditional to trust-dependent during the pandemic, emphasizing the changing role of government trust in social norms.

Findings

Support for redistribution declined overall during COVID-19.

Dependence of altruistic attitudes on government trust increased.

High-income individuals showed a stronger trust-based support shift.

Abstract

This study investigates shifts in acceptable tax rate for reducing inequality during the COVID-19 pandemic using Japanese data. We find a transition from norm-based, unconditional support for redistribution to conditional altruism. Before the pandemic, support remained high and independent of institutional trust. The pandemic generated an overall decline in altruistic attitudes while increasing their dependence on trust in government, particularly among high-income individuals. This "widening gap" implies that in post-crisis societies, the social contract is no longer anchored in stable social norms but increasingly relies on institutional trust to sustain income redistribution from the rich to the poor.