Revealing the “Hidden welfare state”: How policy information influences public attitudes about tax expenditures

Abstract

In this article, we explore how specific policy information shapes public opinion toward the “hidden welfare state” of tax expenditures. These politically and socioeconomically consequential policies—most of which bestow their greatest benefits on upper-income people—are complex and opaque, and scholars’ understanding of citizen attitudes toward them is limited. In response, we use a randomized, general population, online survey experiment to test the effects of providing people with varying amounts and kinds of information about three policies. We find that learning the basic design and rationale of key tax expenditures tends to increase public support for them. However, when informed of the distributive effects of the two policies that favor upper-income people, subjects become much less supportive of these policies. Moreover, policy-specific information appears to help subjects align their preferences with their immediate material interests. Learning the upward tilt of tax expenditures especially makes lower- and middle-income people less supportive of the policies. Our results suggest that if political elites, government administrators and news media routinely offered clear information about tax expenditures, public opinion toward the hidden welfare state would be more firmly grounded. By virtue of their design, these policies discourage public awareness of their mechanisms and distributive effects. Still, greater informational outreach regarding complicated and arcane tax expenditures could bolster public accountability for government actions that favor economically narrow and privileged segments of the population.