Voting over piece-wise linear tax methods
AbstractWe analyze the problem of choosing the most appropriate method for apportioning taxes in a democracy. We consider a simple model of taxation and restrict our attention to piece-wise linear tax methods, which are almost ubiquitous in advanced democracies worldwide. In spite of facing an impossibility result saying that if we allow agents to vote for any piece-wise linear tax method no equilibrium exists, we show that if we limit the domain of admissible methods in a meaningful way, albeit not restrictive, an equilibrium does exist. We also show that, for such a domain, a wide variety of methods can be supported in equilibrium. This last result provides rationale for some activities of special interest groups.
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Bibliographic InfoPaper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 10.02.
Length: 21 pages
Date of creation: Jan 2010
Date of revision:
voting; taxes; majority; single crossing; special interest politics.;
Other versions of this item:
- MORENO-TERNERO, Juan D., 2010. "Voting over piece-wise linear tax methods," CORE Discussion Papers 2010080, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Juan D. Moreno-Ternero, 2010. "Voting over piece-wise linear tax methods," Working Papers 2010-01, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-30 (All new papers)
- NEP-CDM-2010-01-30 (Collective Decision-Making)
- NEP-POL-2010-01-30 (Positive Political Economics)
- NEP-PUB-2010-01-30 (Public Finance)
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