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Viable Tax Constitutions

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  • Perroni, Carlo
  • Scharf, Kimberley A.

Abstract

Taxation is only sustainable if the general public complies with it. This observation is uncontroversial with tax practitioners but has been ignored by the public finance tradition, which has interpreted tax constitutions as binding contracts by which the power to tax is irretrievably conferred by individuals to government, which can then levy any tax it chooses. However, in the absence of an outside party enforcing contracts between members of a group, no arrangement within groups can be considered to be a binding contract, and therefore the power to tax must be sanctioned by individuals on an ongoing basis. In this paper we offer, for the first time, a theoretical analysis of this fundamental compliance problem associated with taxation, obtaining predictions that in some cases point to a re-interpretation of the theoretical constructions of the public finance tradition while in others call them into question.

Suggested Citation

  • Perroni, Carlo & Scharf, Kimberley A., 2003. "Viable Tax Constitutions," Economic Research Papers 269567, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269567
    DOI: 10.22004/ag.econ.269567
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    Cited by:

    1. Stanley L. Winer & George Tridimas & Walter Hettich, 2008. "Social Welfare and Coercion in Public Finance," CESifo Working Paper Series 2482, CESifo.
    2. Stanley L. Winer & George Tridimas & Walter Hettich, 2007. "Social Welfare and Collective Goods Coercion in Public Economics," Carleton Economic Papers 07-03, Carleton University, Department of Economics.

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    More about this item

    Keywords

    Financial Economics; Public Economics;

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods

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