Majoritarian exploitation of the fiscal commons: general taxes–differential transfers

Do majoritarian democracies overexploit the general tax base, akin to the tragedy of the commons? Or, apart from any consideration of efficiency norms, are there “natural” forces in majoritarian politics that keep tax rates below revenue-maximizing limits? This paper formulates the fiscal process th...

Full description

Saved in:
Bibliographic Details
Published in:European Journal of Political Economy 2004-03, Vol.20 (1), p.73-90
Main Authors: Buchanan, James M., Yoon, Yong J.
Format: Article
Language:English
Subjects:
Coalitions
Democracy
Economics
Externalities
Fiscal commons
Fiscal Policy
Fiscal transfer
Laffer curve
Majoritarian democracy
Majority Groups
Membership externality
Political economy
Political science
Revenue
Tax transfer
Taxation
Taxes
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Do majoritarian democracies overexploit the general tax base, akin to the tragedy of the commons? Or, apart from any consideration of efficiency norms, are there “natural” forces in majoritarian politics that keep tax rates below revenue-maximizing limits? This paper formulates the fiscal process through the metaphor of the commons and analyzes the equilibrium that emerges in settings where differing majority coalitions may operate simultaneously to place charges on the general taxable capacity of the economy. The presence of a “membership externality,” emergent from the necessary intersections of members among separate majority coalitions, acts to limit fiscal exploitation, even in the pure transfer settings.
ISSN:0176-2680
1873-5703
DOI:10.1016/j.ejpoleco.2003.05.001