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The magic powers of the word 'tax'

Ever wonder why politicians will do anything to avoid the word "tax"?

Via Julia Whitty, here's a new study from a trio of Columbia psychologists that tries to settle this question. Test subjects were broken up into two groups, and each group was allowed to pick between pricier and cheaper versions of various items like airline tickets. Group A was told that the more expensive items included the price of a "carbon tax," whose proceeds would go toward clean-energy development. Group B was told that the costlier items included the price of a "carbon offset," whose proceeds would go toward clean-energy development. Exact same policy, just different names for each.

You can guess what happened next. In the "offset" group, Democrats, Republicans, and independents all flocked toward the pricier item. They were perfectly happy to pay an extra surcharge to fund CO2 reduction — even Republicans gushed about the benefits of doing so. Not only that, but most of the group supported making the surcharge mandatory. In the "tax" group, however, Democrats were the only ones willing to pay for the costlier item. Republicans in this group were much more inclined to grumble about how much more expensive the tax made things. Labels really do matter.

"Labels matter," concludes Brad Plumer. But we shouldn't fool ourselves into thinking they're overly malleable. In a polity where both parties wanted to do something to keep the Earth from cooking, Republicans and Democrats might agree on a policy of "carbon offsets" and then they'd both call the policy "The Carbon Offset Act" and then that policy would pass and the Earth wouldn't cook. In a polity where one party wants to use the other party's intention to keep the Earth from cooking as a way to corner them into advocating an energy tax that will lose them seats in the next election, an effort to change "carbon tax" into "carbon offsets" wouldn't stick for two minutes. Cap-and-trade, however, is different enough from a carbon tax, and advocates have been building its brand for so long, that Republican efforts to rename it haven't really worked. Yet.

By Ezra Klein  |  January 14, 2010; 11:00 AM ET
Categories:  Climate Change , Taxes  
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Otherwise known as "Irrational Economic Decision Making".

What's in a name? Everything.

Posted by: Jaycal | January 14, 2010 1:00 PM | Report abuse

Ah yes...."Healthy Forests Initiative"=clear cutting...."Clear Skies"=more coal plants. Names are important

Posted by: scott1959 | January 14, 2010 1:09 PM | Report abuse

This study is not studying eternal's studying attitudes of Americans who have been subjected to a 30 year campaign suggesting that they have no essential obligations to society, taxes being one of the more hated examples of those obligations. As the founding of Club Wagner suggests and California's budget crisis demands, we cannot go on this's going to break apart.

The problem is that action on climate change is going to require that people recognize or at least act on a WHOLE BUNCH of obligations to each other and the earth. So while a temporary or one-time "victory" can be gained by renaming something, in the long run we are going to have to recognize that with freedom and privilege and wealth comes responsibility.

I'm not against clever naming and clever framing...but sometimes learning new concepts and changing real behavior is an inevitability.

Posted by: michaelterra | January 14, 2010 7:06 PM | Report abuse

Cap-and-trade is terribly worse than a mere fossil tax balanced with a wind subsidy. This cartoon explains why:

Sorry you have to copy-and-paste the URL. Why do WaPo blogs not link?

Posted by: jsalsman | January 19, 2010 7:53 PM | Report abuse

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