Fiscal Policy Preferences with Tax, Spending and Borrowing Trade-offs

It is a common complaint about public attitudes towards fiscal policy that voters want something for nothing, or that they want “Scandinavian levels of spending and American levels of taxation”. However, these results typically come from survey questions which make expressing these views entirely possible, rather than asking respondents to internalise the relevant trade-offs. Recent research has begun to move in this direction by building in trade-offs with taxes when asking about spending proposals, as well as considering the necessary tax or spending consequences of deficit reduction. I build on this work to paint a comprehensive picture of realistic fiscal policy preferences in the United Kingdom, incorporating each of the trade-offs inherent in the debt-tax-spending trilemma. In doing so, I uncover distinctive patterns of heterogeneity across the different dimensions of trade-off. Specifically, the question of spending cuts versus higher borrowing divides the population along gender and income lines (though on income this is ends against the middle, not rich against poor). Taxation versus spending divides older versus younger voters (with older voters more in favour of both being higher). Debt versus taxation reveals a distinctive and novel distinction between those who own their homes outright (who prefer tax increases) and those who rent or own with a mortgage (prefer more borrowing).