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Crisis of the tax state

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  • Dieter Bös

Abstract

This paper presents a simple model of the ‘tax state’, where a progressive income tax is used to finance publicly supplied goods that are distributed free of charge. The individual citizens may be dissatisfied with such a fiscal system. If more than 50% are dissatisfied, we speak of a ‘crisis of the tax state’. Such a crisis becomes more probable, if the allocational and distributional instruments are chosen inadequately, if the disincentive effects of the progressive tax increase and if the inefficiency of public supply increases. Paradoxically such a crisis becomes more improbable, if people want a smaller public sector. Moreover, it has been shown that the psychological attitudes of the consumers and the inefficiency of public supply may bring about an ‘absolute’ crisis of the tax state. In such a situation there do not exist any realizations of tax-state instruments that are supported by a majority. Copyright Martinus Nijhoff Publishers 1982

Suggested Citation

  • Dieter Bös, 1982. "Crisis of the tax state," Public Choice, Springer, vol. 38(3), pages 225-241, January.
    • Handle: RePEc:kap:pubcho:v:38:y:1982:i:3:p:225-241
    DOI: 10.1007/BF00144848
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    References listed on IDEAS

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    1. Usher, Dan, 1977. "The welfare economics of the socialization of commodities," Journal of Public Economics, Elsevier, vol. 8(2), pages 151-168, October.
    2. Feldstein, Martin, 1973. "On the optimal progressivity of the income tax," Journal of Public Economics, Elsevier, vol. 2(4), pages 357-376.
    3. Romer, Thomas & Rosenthal, Howard, 1979. "The elusive median voter," Journal of Public Economics, Elsevier, vol. 12(2), pages 143-170, October.
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