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The Political Costs of Tax Increases and Expenditure Reductions: Evidence from State Legislative Turnover

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  • Sobel, Russell S

Abstract

This paper estimates the political costs of increasing taxes and cutting expenditures for members of a legislature. It is found that both costs are individually significant, but that they are not significantly different. This coincides with the first order condition for maximization of the probability of reelection. Republican legislatures have a higher political cost for taxes, thus the party's relative bias toward smaller government is founded in stronger constituent preferences against taxes, not for lower spending. Additionally, by being ideologically conservative, Republicans lower the political costs of taxes, while by being more liberal, Democrats lower the cost of cutting expenditures. Copyright 1998 by Kluwer Academic Publishers

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  • Sobel, Russell S, 1998. "The Political Costs of Tax Increases and Expenditure Reductions: Evidence from State Legislative Turnover," Public Choice, Springer, vol. 96(1-2), pages 61-79, July.
    • Handle: RePEc:kap:pubcho:v:96:y:1998:i:1-2:p:61-79
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    Cited by:

    1. Helmut Herwartz & Bernd Theilen, 2014. "On the political and fiscal determinants of income redistribution under federalism and democracy: evidence from Germany," Public Choice, Springer, vol. 159(1), pages 121-139, April.
    2. Geys, Benny & Vermeir, Jan, 2008. "The political cost of taxation: new evidence from German popularity ratings [Besteuerung und Popularität von Politikern: Neue Ergebnisse für die Deutsche Bundesregierung 1978-2003]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-06, WZB Berlin Social Science Center.
    3. Geoffrey Propheter, 2023. "Partisanship and Property Tax Redistribution: Evidence From Repealing Colorado's Gallagher Amendment," Public Finance Review, , vol. 51(5), pages 619-648, September.
    4. Sezer Yasar & Ceyhun Elgin, 2024. "Democracy and fiscal-policy response to COVID-19," Public Choice, Springer, vol. 198(1), pages 25-45, January.
    5. Ginés Rus & M. Socorro, 2010. "Infrastructure Investment and Incentives with Supranational Funding," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(3), pages 551-567, September.
    6. Benny Geys & Jan Vermeir, 2008. "Taxation and presidential approval: separate effects from tax burden and tax structure turbulence?," Public Choice, Springer, vol. 135(3), pages 301-317, June.
    7. Gary A. Wagner & Erick M. Elder, 2005. "The Role of Budget Stabilization Funds in Smoothing Government Expenditures over the Business Cycle," Public Finance Review, , vol. 33(4), pages 439-465, July.
    8. John D. Merrifield & Barry W. Poulson, 2016. "A Dynamic Scoring Simulation Analysis of How TEL Design Choices Impact Government Expansion," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(2), pages 60-68, April.
    9. Gary Wagner & Russell Sobel, 2006. "State budget stabilization fund adoption: Preparing for the next recession or circumventing fiscal constraints?," Public Choice, Springer, vol. 126(1), pages 177-199, January.
    10. Ginés de Rus, 2015. "La política de infraestructuras en España. Una reforma pendiente," Policy Papers 2015-08, FEDEA.
    11. Ginés de Rus & Javier Campos & Daniel Graham & M. Pilar Socorro & Jorge Valido, 2020. "Evaluación Económica de Proyectos y Políticas de Transporte: Metodología y Aplicaciones. Parte 1: Metodología para el análisis coste-beneficio de proyectos y políticas de transporte," Working Papers 2020-11, FEDEA.
    12. de Rus Ginés & Socorro M. Pilar, 2017. "Planning, Evaluation and Financing of Transport Infrastructures: Rethinking the Basics," Review of Network Economics, De Gruyter, vol. 16(2), pages 143-160, June.
    13. M Socorro Puy, 2019. "Incentives for progressive income taxation," Journal of Theoretical Politics, , vol. 31(1), pages 66-102, January.
    14. Schmidt, Torsten, 2001. "Finanzreformen in der Bundesrepublik Deutschland: Analyse der Veränderungen der Finanzverfassung von 1949 bis 1989," RWI Schriften, RWI - Leibniz-Institut für Wirtschaftsforschung, volume 67, number 67.

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