The political economy of endogenous taxation and redistribution

The political economy of endogenous taxation and redistribution

This paper examines a simple dynamic model in which agents vote over capital income taxation and redistributive transfers. We show that in equilibrium the typical agent's preferences over the tax rate are single-peaked and derive a closed-form solution for the majority-rule tax rate. We also sh...

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Veröffentlicht in:Economics letters 1997-10, Vol.56 (2), p.223-227
Hauptverfasser: Dolmas, Jim, Huffman, Gregory W.
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Sprache:eng
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Political economy
Redistributive taxation
Taxation
Voting
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Huffman, Gregory W.
description This paper examines a simple dynamic model in which agents vote over capital income taxation and redistributive transfers. We show that in equilibrium the typical agent's preferences over the tax rate are single-peaked and derive a closed-form solution for the majority-rule tax rate. We also show that high levels of initial wealth inequality can place the economy on the `wrong side of the Laffer curve'.
doi_str_mv 10.1016/S0165-1765(97)81904-0
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1873-7374
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source RePEc; Elsevier ScienceDirect Journals; Periodicals Index Online
subjects Political economy
Redistributive taxation
Taxation
Voting
title The political economy of endogenous taxation and redistribution
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