A Contribution to the Positive Theory of Indirect Taxation
AbstractIn this paper I analyse a probabilistic voting model where self-interested governments set their taxation policies in order to maximise the probabil- ity of winning elections. Society is divided into groups which have di¤erent preferences for the consumption of goods. Results show how candidates are captured by the most powerful groups, which not necessarily repre- sent the median voter but may be located at more extreme positions. The introduction of a probabilistic voting model characterized by the presence of single-minded groups overrules the classic results achieved by the me- dian voter theorem, because it is no longer the position on the income scale to drive the equilibrium policy but the ability of groups to focus on their most preferred goods, instead. This ability allows them to achieve a strong political power which candidates cannot help going along with, because they would lose elections otherwise.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6116.
Date of creation: 05 Dec 2007
Date of revision:
Probabilistic Voting Theory; Single-mindedness; Indirect Taxation; Public Expenditure;
Other versions of this item:
- Emanuele, Canegrati, 2007. "A Contribution to the Positive Theory of Direct Taxation," MPRA Paper 6117, University Library of Munich, Germany.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-08 (All new papers)
- NEP-CDM-2007-12-08 (Collective Decision-Making)
- NEP-PBE-2007-12-08 (Public Economics)
- NEP-PUB-2007-12-08 (Public Finance)
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