What is Missed If We Leave Out Collective Choice in the Analysis of Taxation
Posted: 25 Aug 1998
Omission of collective choice prevents the analyst from understanding the central role of political equilibrium. To create a framework that places tax policies in a broader equilibrium context, we must model the underlying collective allocation mechanism and use it as a starting point, whether we do empirical work explaining observed features of tax systems, or whether we engage in research on tax efficiency. A broader perspective of this nature also forces us to re-examine well-known concepts, such as tax expenditures, flat taxation and the marginal efficiency cost of public funds, and to question and re-interpret some of the conclusions that have been reached in the literature related to these concepts.
JEL Classification: D7, H1, H2, H3
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