IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Redistributive Taxation, PublicExpenditure and the Size of Government

Listed author(s):
  • Sanghamitra Bandyopadhyay
  • Joan Esteban

We introduce a model of redistributive income taxation and public expenditure. Thisjoint treatment permits analyzing the interdependencies between the two policies: onecannot be chosen independently of the other. Empirical evidence reveals that partisanconfrontation essentially falls on expenditure policies rather than on income taxation.We examine the case in which the expenditure policy (or the size of government) ischosen by majority voting and income taxation is consistently adjusted. Thisadjustment consists of designing the income tax schedule that, given the expenditurepolicy, achieves consensus among the population. The model determines theconsensus income tax schedule, the composition of public expenditure and the size ofgovernment. The main results are that inequality is negatively related to the size ofgovernment and to the pro-rich bias in public expenditure, and positively ornegatively related to the marginal income tax, depending on substitutability betweengovernment supplied and market goods. These implications are validated usingOECD data.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Distributional Analysis Research Programme Papers with number 095.

in new window

Date of creation: Dec 2009
Handle: RePEc:cep:stidar:095
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cep:stidar:095. 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: ()

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.