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Are the rich too rich to be expropriated?: Economic power and the feasibility of constitutional limits to redistribution

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  • Friedrich Breyer
  • Heinrich Ursprung

Abstract

Why is it that, in democracies, the poor do not expropriate the rich even though they outnumber them? In this paper we analyze the commonly held belief that the rich escape expropriation because they are economically powerful. We demonstrate that the economically powerful, i.e. the above-average income earners, are indeed in a position to bribe the small segment of the voters with incomes between the median and the mean to resist the temptation of supporting confiscatory taxation. This is true even if compensation payments in cash are politically unfeasible and therefore need to be made in terms of an evenly distributed private good; and it may even be true if only pure public goods are available to swing the middle class. Copyright Kluwer Academic Publishers 1998

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  • Friedrich Breyer & Heinrich Ursprung, 1998. "Are the rich too rich to be expropriated?: Economic power and the feasibility of constitutional limits to redistribution," Public Choice, Springer, vol. 94(1), pages 135-156, January.
  • Handle: RePEc:kap:pubcho:v:94:y:1998:i:1:p:135-156
    DOI: 10.1023/A:1004932822295
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    References listed on IDEAS

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    1. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 551-584.
    2. Eichberger, Jurgen & Pethig, Rudiger, 1994. "Constitutional choice of rules," European Journal of Political Economy, Elsevier, vol. 10(2), pages 311-337, July.
    3. Bowles, Roger & Jones, Philip, 1991. "Political participation and the limits to redistribution," European Journal of Political Economy, Elsevier, vol. 7(2), pages 127-139, July.
    4. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    5. Ireland, Norman J., 1990. "The mix of social and private provision of goods and services," Journal of Public Economics, Elsevier, vol. 43(2), pages 201-219, November.
    6. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
    7. Roemer, J.E., 1995. "Why the Poor Do not Expropriate the Rich in Democracies: A New Argument," Department of Economics 95-04, California Davis - Department of Economics.
    8. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
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    Cited by:

    1. Salmai Qari & Kai Konrad & Benny Geys, 2012. "Patriotism, taxation and international mobility," Public Choice, Springer, vol. 151(3), pages 695-717, June.
    2. Thaize Challier, M.-Christine, 2010. "Socio-political conflict, social distance, and rent extraction in historical perspective," European Journal of Political Economy, Elsevier, vol. 26(1), pages 51-67, March.
    3. Danziger, Leif & Ursprung, Heinrich W., 2001. "Risk aversion and social mobility: the implausibility of order-preserving income redistributions," Economics Letters, Elsevier, vol. 74(1), pages 9-13, December.
    4. Bernasconi, Michele, 2006. "Redistributive taxation in democracies: Evidence on people's satisfaction," European Journal of Political Economy, Elsevier, vol. 22(4), pages 809-837, December.
    5. Leif Danziger & Heinrich Ursprung, 2000. "Risk-Aversion and Social Mobility: The Impossibility of Order-Preserving Income Redistributions," CESifo Working Paper Series 321, CESifo Group Munich.
    6. Aidt, T. & Jensen, P.S., 2007. "The Taxman Tools Up: An Event History Study of the Introduction of the Personal Income Tax in Western Europe, 1815-1941," Cambridge Working Papers in Economics 0766, Faculty of Economics, University of Cambridge.
    7. Harms, Philipp & Zink, Stefan, 2003. "Limits to redistribution in a democracy: a survey," European Journal of Political Economy, Elsevier, vol. 19(4), pages 651-668, November.
    8. Harms, Philipp & Zink, Stefan, 2003. "Eating the Rich vs. Feeding the Poor: Borrowing Constraints and the Reluctance to Redistribute," Public Choice, Springer, vol. 116(3-4), pages 351-366, September.
    9. Pfarr, Christian, 2012. "Meltzer-Richard and social mobility hypothesis: revisiting the income-redistribution nexus using German choice data," MPRA Paper 43325, University Library of Munich, Germany.
    10. Thomas Goda & Santiago Sanchez, 2017. "Market and disposable top income shares adjusted by national accounts data," DOCUMENTOS DE TRABAJO CIEF 015674, UNIVERSIDAD EAFIT.
    11. Bellani, Luna & Fabella, Vigile Marie, 2018. "Upward Income Mobility and Legislator Support for Education Policies," IZA Discussion Papers 11324, Institute for the Study of Labor (IZA).
    12. Dina Balalaeva, 2012. "Innovations as Public Goods Provision with Negative Externalities: Role of Parliamentarism," HSE Working papers WP BRP 06/PS/2012, National Research University Higher School of Economics.
    13. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo Group Munich.

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