A recent video published on Prime Minister Justin Trudeau’s X (formerly Twitter) account amassed more than four million views in the first 48 hours. It’s not clear if the video – which doubles down on the Liberal claim that only 0.13 per cent of Canadians will be affected by proposed tax changes to the capital gains inclusion rate – has done more harm than good.
The Prime Minister’s message is not the only view being circulated. Many Canadians disagree with the nature of the tax change, others with the description of how many people it will affect and, of course, some voters just hate it because of political ideology.
Feelings aside, how reliable is the tax-related content we consume on social media?
A recent paper published in the Journal of Behavioral and Experimental Economics provides some intriguing insights into this very question. Titled “Diffusion of tax-related communication on social media,” the article looks at linguistic elements that drive the sharing of tweets related specifically to tax.
According to the study, tweets that use moral and emotional language are more likely to be retweeted. Žiga Puklavec, a PhD candidate and one of the study’s authors, explains: “We find that tax-related tweets are more often retweeted when they contain moral words and positive emotional words. This doesn’t mean the content is the most truthful or useful, but it’s catchy because of the words used.”
These findings are especially relevant in the current debate over the capital gains inclusion rate. As Canadians consume online opinions for and against the government’s proposed changes, as well as with the framing of the policy, understanding the psychological drivers behind the spread of information can help us be more discerning consumers of that content.
Interestingly, Mr. Puklavec initially expected that messages with negative language would get shared more due to a negativity bias, in which people tend to give more weight to negative events and information. However, with respect to tax-related tweets, the study found that positive emotional language was associated with more retweets.
He suggests this might be due to an “expectancy violation effect.” In simpler terms, people pay more attention to messages that contradict their expectations.
If the norm is that people generally dislike aspects of taxation, positive language about taxation stands out and gets more shares. Additionally, moral language taps into deep-seated beliefs about fairness and justice, making these messages more compelling.
For example, tweets criticizing proposed increases to the inclusion rate as unfair may spread quickly because they resonate with our inherent concerns about justice and equity. These perspectives might be different, depending on what circles you run in. Conversely, a tweet or video highlighting potential benefits might get shared because it defies the typical negative sentiment about tax increases. At least within other circles.
Beyond the moral and emotional language used in tweets about tax, it’s essential to recognize that shared content might not be reliable. For example, some people mistakenly believe the tax rate on capital gains is going up to two-thirds from one-half, as opposed to raising the proportion of capital gains that must be included as investment income. There are many examples of this false information being retweeted thousands of times.
The Prime Minister’s messaging has largely been about tax fairness. The video states that “some people don’t think the richest few should pay more in taxes.” A good case can be made to separate that messaging from the now famous 0.13 per cent figure, because this piece of data is becoming a focal point that could undermine acceptance of the policy.
According to Stephen Punwasi, co-founder of the housing news outlet Better Dwelling, who provided a tweet thread challenging the 0.13 per cent figure in the video, not only are a lot more than 0.13 per cent of Canadians being affected, it’s not just the “richest few” demographic the Prime Minister refers to.
“Being aware that a message is shared not necessarily because it is the most informative but because it is the catchiest due to its language can help people be more critical of the information they consume,” said Mr. Puklavec.
The research also suggests that governments could leverage the paper’s findings for public good. By analyzing the sentiment of tax-related posts over time, legislators can gauge public opinion and respond accordingly. For instance, if a particular tax policy generates a lot of negative sentiment online, this could indicate areas where more public education or policy adjustments are needed.
The Prime Minister’s video shows the government is trying the public education strategy, but focusing on a questionable 0.13 per cent figure may drive a deeper wedge instead of closing the gap of acceptance.
Preet Banerjee is a consultant to the wealth management industry with a focus on commercial applications of behavioural finance research.