Over-Concentration of Income and Middle-Class Preferences for Redistribution

The aim of the paper is to explore the impact of the structure of inequality on individual preferences for redistribution. Starting from the observation that most advanced democracies have witnessed over the last three decades rising income inequality, which mainly results from increases at the upper end of the income distribution, we intend to measure the potentially negative impact of the increasing gap between the middle class and the top incomes on middle class preferences for redistribution. At which point does an over-concentration of income in the hands of a small fraction of the population jeopardize the capacity of the state to redistribute income among the general population? We hypothesize this cut point depends on the (perceived) size of the fiscal basis. If the middle-income groups expect the top-income groups to avoid taxes, they will oppose increases in taxation because they anticipate the tax burden to be entirely borne by them. This simple mechanism could explain why the middle-income groups vote with the ‘poor’ in some countries, while they vote with the ‘rich’ in other countries. We use new data on the concentration of wealth on top-incomes and combine it with cross-national surveys on preferences for redistribution. By looking at the pattern of preferences for redistribution by income quintiles conditional on the inequality structure of the economy, we directly test such a mechanism. Our findings may therefore highlight how a change in the structure of inequality may impact the political support for redistribution.