Political Competition over Distortionary Taxation
Political parties compete over income tax functions, and voters vote and decide whether to pay full taxes or to make an e®ort to modify their tax bur- den. We show that political parties only propose e±cient income tax func- tions, in a similar manner to the probabilistic voting theory. Regarding the shape of income tax functions, it need not be the case that the majority of vot- ers prefer progressive taxation to regressive taxation as a consequence of the distortions. Nevertheless, we prove that the political appeal for progressivity is restored under mild conditions.
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