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Capital Taxation and Electoral Accountability

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Author Info
Aidt, T.
Magris, F.

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Abstract

In a representative democracy, voters can use elections to protect their property by holding politicians accountable for the tax policies they implement while in office. This paper demonstrates that performance voting can - partly or wholly - solve the capital levy problem. We characterise the ‘best’ non-expropriating tax policies that can be sustained in a stationary Markov Perfect Equilibrium; show when this coincides with the second best tax policy; and discuss, in detail, the robustness of the result.

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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0318.

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Length: 30
Date of creation: Feb 2003
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Handle: RePEc:cam:camdae:0318

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Related research
Keywords: performance voting; capital taxation; time consistency;

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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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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.:
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  4. Persson, Torsten & Tabellini, Guido, 1994. "Representative democracy and capital taxation," Journal of Public Economics, Elsevier, vol. 55(1), pages 53-70, September. [Downloadable!] (restricted)
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  6. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314.
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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. Aidt, T.S. & Dutta, J., 2008. "Electoral Uncertainty and Public Goods," Cambridge Working Papers in Economics 0843, Faculty of Economics, University of Cambridge. [Downloadable!]
  2. Eric Borgne & Ben Lockwood, 2006. "Do Elections Always Motivate Incumbents? Learning vs. Re-Election Concerns," Public Choice, Springer, vol. 129(1), pages 41-60, October. [Downloadable!] (restricted)
  3. Toke A. Aidt & Facundo Albornoz, 2007. "An Economic Theory of Political Institutions: Foreign Intervention and Overseas Investments," Discussion Papers 07-03, Department of Economics, University of Birmingham. [Downloadable!]
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