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Federal tax burdens and grant benefits to states: The impact of imperfect representation

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  • James Bennett
  • Eddie Mayberry

Abstract

This paper has shown that the observed distribution pattern of federal grants and taxes among states is dependent on more than a simple redistributional motive. As previous studies have shown, the distribution of taxes and some grants does seem to be related to per capita income. However, our analysis reveals the difficulty of imputing altruistic motives to politicians without taking into account the institutional or behavioral environment within which the politician functions. The model we have developed indicates that politicians are largely interested in income distribution only to the extent that it furthers their self-interest. The ability of politicians to improve the welfare of the average citizen of his state will, in part, depend upon his seniority and the number of citizens he represents. Citizens of states with politicians of greater seniority, and who are represented by relatively more politicians are more likely to be treated more favorably by the federal government. In short, not all citizens receive the same quality or quantity of representation. The oft-repeated claim by incumbent politicians that they should be re-elected because their seniority gives them more influence appears to have merit. Taking into account the higher benefits and lower taxes resulting from a six-year senatorial term, the average citizen will find that re-election of the incumbent senator is worth approximately $ 45, other things equal. Copyright Martinus Nijhoff Publishers b.v. 1979

Suggested Citation

  • James Bennett & Eddie Mayberry, 1979. "Federal tax burdens and grant benefits to states: The impact of imperfect representation," Public Choice, Springer, vol. 34(3), pages 255-269, September.
    • Handle: RePEc:kap:pubcho:v:34:y:1979:i:3:p:255-269
    DOI: 10.1007/BF00225668
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    References listed on IDEAS

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    1. James A. Maxwell, 1954. "The Equalizing Effects Of Federal Grants," Journal of Finance, American Finance Association, vol. 9(2), pages 209-215, May.
    2. Davis, Otto A. & Hinich, Melvin J. & Ordeshook, Peter C., 1970. "An Expository Development of a Mathematical Model of the Electoral Process," American Political Science Review, Cambridge University Press, vol. 64(2), pages 426-448, June.
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    Cited by:

    1. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
    2. Dahlby, Bev & Rodden, Jonathan & Wilson, Sam, 2009. "A Median Voter Model of the Vertical Fiscal Gap," Working Papers 2009-14, University of Alberta, Department of Economics.
    3. Walter Cont & Alberto Porto, 2016. "Fiscal Policy and Income Distribution: Measurement for Argentina 1995 ¨C 2010," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 75-92, May.
    4. Robert K. Fleck, 2008. "Voter Influence and Big Policy Change: The Positive Political Economy of the New Deal," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 1-37, February.
    5. Jorge Pablo Puig & Alberto Porto, 2021. "On the interaction between own revenues and intergovernmental transfers. Evidence from Argentinean local governments," Asociación Argentina de Economía Política: Working Papers 4508, Asociación Argentina de Economía Política.
    6. Fleck, Robert K., 2001. "Population, Land, Economic Conditions, and the Allocation of New Deal Spending," Explorations in Economic History, Elsevier, vol. 38(2), pages 296-304, April.
    7. Stephen Hoenack, 1983. "On the stability of legislative outcomes," Public Choice, Springer, vol. 41(2), pages 251-260, January.

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