Much of the existing research on preferences over taxation assumes the state to be a capable enforcer of tax policies. Yet, states vary tremendously in their ability to enforce tax policies and collect taxes from its citizens. Moreover, it is unlikely that citizens are ignorant of and indifferent to the state's capacity to enforce tax laws.

In this paper, we ask how changes in taxpayers’ perceptions of the state’s fiscal capacity change preferences over taxation. Does lower tax capacity reduce overall demand for taxation and voters’ willingness to pay tax? Moreover, do (poor) voters’ preferences over taxes on the rich change if they think that the rich can easily evade taxes? Similarly, voters might be less willing to pay tax in response to evasion by the rich for two different reasons: 1) perceived efficiency and revenue losses; or 2) increased unfairness of taxation.

The influence of state capacity on citizen perceptions of distribution and, consequently their preferences and behavior has received limited attention in political science and economics. To address this gap in our understanding, we undertake a survey experiment in which we encourage different perceptions of the state’s fiscal capacity. Subjects are given true information treatments about the state’s ability to enforce tax policies and evasion across income groups, priming either fairness or revenue losses. We investigate the effects on respondents’ preferences over tax rates, taxes on the rich, and their own willingness to pay tax.