"Tax the Rich"? The Financial Crisis, Fairness Arguments, and Progressive Income Taxation Worldwide

Contrary to predominant theories that focus on the impact of pure economic self-interest on redistributive taxation, recent studies have highlighted the importance of fairness perceptions for tax progressivity. The financial crisis has caused major violations of people’s fairness principles as governments bailed out financial risk-takers with public money. Has this process had an influence on taxation of the richest members of society? I argue that the financial crisis and states’ reactions to it have fuelled fairness-based compensatory demands for taxing the rich. I test this claim by analysing a new dataset on top personal income tax (PIT) rates for 123 countries from 2006–2014, applying weighting methods and a difference-in-differences design. The findings support my argument that crisis-induced notions of restoring fiscal fairness have increased taxes on the rich.