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The Complexity of Tax Structure in Competitive Political Systems

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Author Info
George Warskett
Stanley Winer
Walter Hettich

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Abstract

We explore the nature of tax complexity in competitive political systems. The analysis does not rely upon imperfections in the operation of the public sector. Complexity arises in the course of the struggle for office, during which political parties are induced to propose platforms that discriminate carefully among heterogeneous voters. A basic model is enriched by the addition of administration costs and self-selection, factors which limit the ability of any government to discriminate fully. The effect on complexity of inequalities in political influence is also investigated. The analysis suggests that simple tax systems (such as a flat tax or a broadly based tax without special provisions) are not compatible with vigorous political competition. Copyright Kluwer Academic Publishers 1998

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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 5 (1998)
Issue (Month): 2 (May)
Pages: 123-151
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Handle: RePEc:kap:itaxpf:v:5:y:1998:i:2:p:123-151

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Related research
Keywords: Taxation; Tax complexity; Administration costs; Self-selection; Probabilistic voting; Flat tax;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Coughlin, Peter J & Mueller, Dennis C & Murrell, Peter, 1990. "Electoral Politics, Interest Groups, and the Size of Government," Economic Inquiry, Oxford University Press, vol. 28(4), pages 682-705, October.
  2. Seade, J. K., 1977. "On the shape of optimal tax schedules," Journal of Public Economics, Elsevier, vol. 7(2), pages 203-235, April. [Downloadable!] (restricted)
  3. Berliant, Marcus & Gouveia, Miguel, 1993. "Equal sacrifice and incentive compatible income taxation," Journal of Public Economics, Elsevier, vol. 51(2), pages 219-240, June. [Downloadable!] (restricted)
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  4. Seade, Jesus, 1982. "On the Sign of the Optimum Marginal Income Tax," Review of Economic Studies, Blackwell Publishing, vol. 49(4), pages 637-43, October. [Downloadable!] (restricted)
  5. Mayshar, Joram, 1991. " Taxation with Costly Administration," Scandinavian Journal of Economics, Blackwell Publishing, vol. 93(1), pages 75-88.
  6. Kiesling, Herbert J, 1990. "Economic and Political Foundations of Tax Structure: Comment," American Economic Review, American Economic Association, vol. 80(4), pages 931-34, September. [Downloadable!] (restricted)
  7. Yang, C C, 1995. "Endogenous Tariff Formation under Representative Democracy: A Probabilistic Voting Model," American Economic Review, American Economic Association, vol. 85(4), pages 956-63, September. [Downloadable!] (restricted)
  8. Schofield, Norman, 1978. "Instability of Simple Dynamic Games," Review of Economic Studies, Blackwell Publishing, vol. 45(3), pages 575-94, October. [Downloadable!] (restricted)
  9. Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February. [Downloadable!] (restricted)
  10. Slemrod, Joel, 1990. "Optimal Taxation and Optimal Tax Systems," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 157-78, Winter. [Downloadable!] (restricted)
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  11. Wilson, John Douglas, 1989. "On the Optimal Tax Base for Commodity Taxation," American Economic Review, American Economic Association, vol. 79(5), pages 1196-1206, December. [Downloadable!] (restricted)
  12. Coughlin, Peter J. & Mueller, Dennis C. & Murrell, Peter, 1990. "A model of electroral competition with interest groups," Economics Letters, Elsevier, vol. 32(4), pages 307-311, April. [Downloadable!] (restricted)
  13. Robin Boadway & Michael Keen, 1991. "Public Goods, Self-Selection and Optimal Income Taxation," Working Papers 828, Queen's University, Department of Economics.
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  14. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March. [Downloadable!] (restricted)
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  15. Kaplow, Louis, 1995. "A Model of the Optimal Complexity of Legal Rules," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 150-63, April.
  16. Dan Usher, 1994. "The Significance of the Probabilistic Voting Theorem," Canadian Journal of Economics, Canadian Economics Association, vol. 27(2), pages 433-45, May. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stanley L. Winer & Walter Hettich, 2002. "The Political Economy of Taxation: Positive and Normative Analysis when Collective Choice Matters," Carleton Economic Papers 02-11, Carleton University, Department of Economics. [Downloadable!]
  2. Claudio Agostini, 2004. "The Effect of Sales Tax Rates on Food Exemptions," ILADES-Georgetown University Working Papers inv155, Ilades-Georgetown University, School of Economics and Bussines. [Downloadable!]
  3. Kelly Edmiston & Shannon Mudd & Neven Valev, 2000. "Incentive Targeting, Influence Peddling, and Foreign Direct Investment," International Studies Program Working Paper Series, at AYSPS, GSU paper0007, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
    Other versions:
  4. Evrenk, Haldun, 2008. "Mackerels in the Moonlight: A Duopoly Model of Political Agency," Working Papers 2008-4, Suffolk University, Department of Economics. [Downloadable!]
  5. Alberto Sole Olle, 1998. "The effects of tax deductibility on the mix of property taxes and use charges: an empirical analysis of the spanish case," Working Papers in Economics 41, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
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