Political institutions and tax rate initiatives
In a model of a representative democracy, we incorporate into the analysis of tax design the constitutional provision that allows voters to propose tax initiatives. In this paper, we present a theory of tax substitution as the rationale for a tax rate limit (TRL) initiative. In our model the tax system at the status quo is determined by the electoral competition between parties. This political institution aggregates the voters’ preferences for tax policy according to the voters’ marginal proportion of the expected vote that different coalition of voters can deliver in the election. The approval of a TRL, however, depends on the majority rule, and it aggregates the preferences of the median voter of tax initiatives. Thus, a TRL is the result of two political institutions with different mechanisms to aggregate the preferences of voters. Moreover, our paper distinguishes the role of perfect and imperfect information on the distribution of voters´ preferences for tax systems in approving a tax initiative. In this paper we identify conditions on the distribution of preferences and income of the electorate and the median voter that guarantee the approval (rejection) of tax initiatives.
Volume (Year): XXVIII (2009)
Issue (Month): 2 (November)
|Contact details of provider:|| Postal: Avenida Lazaro Cardenas 4600 Ote., Fraccionamiento Residencial Las Torres, C.P. 64930. Monterrey, Nuevo Leon. México.|
Phone: +52 (81) 8329 4150
Fax: +52 (81) 8342 2897
Web page: http://www.economia.uanl.mx
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
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.:
- David Austen-Smith, 2000. "Redistributing Income under Proportional Representation," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1235-1269, December.
- Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
- Hettich,Walter & Winer,Stanley L., 2005.
"Democratic Choice and Taxation,"
Cambridge University Press, number 9780521021807, 1.
- Shapiro, Perry & Sonstelie, Jon, 1982. "Did Proposition 13 Slay Leviathan?," American Economic Review, American Economic Association, vol. 72(2), pages 184-90, May.
- Eytan Sheshinski, 2006.
"Optimum Commodity Taxation in Pooling Equilibria,"
Discussion Paper Series
dp429, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Eytan Sheshinski, 2006. "Optimum Commodity Taxation in Pooling Equilibria," CESifo Working Paper Series 1815, CESifo Group Munich.
- Eytan Sheshinski, 2006. "Optimum Commodity Taxation in Pooling Equilibri," Levine's Bibliography 321307000000000370, UCLA Department of Economics.
- Sheshinski, Eytan, 2006. "Optimum Commodity Taxation in Pooling Equilibria," MPRA Paper 54717, University Library of Munich, Germany, revised 2007.
- Shadbegian, Ronald J., 1999. "The Effect of Tax and Expenditure Limitations on the Revenue Structure of Local Government, 1962-87," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 221-38, June.
- Theofanis Tsoulouhas & Charles M. Kahn, 1999. "Strategic transmission of information and short-term commitment," Economic Theory, Springer, vol. 14(1), pages 131-153.
- Dye, Richard F. & McGuire, Therese J., 1997. "The effect of property tax limitation measures on local government fiscal behavior," Journal of Public Economics, Elsevier, vol. 66(3), pages 469-487, December.
- Thomas A. Husted & Lawrence W. Kenny, 2007. "Explanations for States Adopting Limits on Educational Spending," Public Finance Review, , vol. 35(5), pages 586-605, September.
- Courant, Paul N. & Rubinfeld, Daniel L., 1981. "On the welfare effects of tax limitation," Journal of Public Economics, Elsevier, vol. 16(3), pages 289-316, December.
- Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, 1.
- Banks, Jeffrey S. & Sobel, Joel., 1985.
"Equilibrium Selection in Signaling Games,"
565, California Institute of Technology, Division of the Humanities and Social Sciences.
- Atkinson, A. B. & Stiglitz, J. E., 1972. "The structure of indirect taxation and economic efficiency," Journal of Public Economics, Elsevier, vol. 1(1), pages 97-119, April.
- Preston, Anne E. & Ichniowski, Casey, 1991. "A National Perspective on the Nature and Effects of the Local Property Tax Revolt, 1976-1986," National Tax Journal, National Tax Association, vol. 44(2), pages 123-45, June.
- James Alm & Mark Skidmore, 1999. "Why do Tax and Expenditure Limitations Pass in State Elections?," Public Finance Review, , vol. 27(5), pages 481-510, September.
- Skidmore, Mark, 1999. " Tax and Expenditure Limitations and the Fiscal Relationships between State and Local Governments," Public Choice, Springer, vol. 99(1-2), pages 77-102, April.
When requesting a correction, please mention this item's handle: RePEc:ere:journl:v:xxviii:y:2009:i:2:p:65-94. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dora María Vega Facio)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.