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Capital taxation and electoral accountability

  • Aidt, Toke S.
  • Magris, Francesco

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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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 22 (2006)
Issue (Month): 2 (June)
Pages: 277-291

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Handle: RePEc:eee:poleco:v:22:y:2006:i:2:p:277-291
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