Redistributive taxation, public expenditure, and size of governent


Autoria(s): Bandyopadhyay, Sanghamitra; Esteban, Joan
Contribuinte(s)

Universitat Autònoma de Barcelona. Unitat de Fonaments de l'Anàlisi Econòmica

Institut d'Anàlisi Econòmica

Data(s)

13/05/2010

Resumo

We introduce a model of redistributive income taxation and public expenditure. This joint treatment permits analyzing the interdependencies between the two policies: one cannot be chosen independently of the other. Empirical evidence reveals that partisan confrontation essentially falls on expenditure policies rather than on income taxation. We examine the case in which the expenditure policy (or the size of government) is chosen by majority voting and income taxation is consistently adjusted. This adjustment consists of designing the income tax schedule that, given the expenditure policy, achieves consensus among the population. The model determines the consensus in- come tax schedule, the composition of public expenditure and the size of government. The main results are that inequality is negatively related to the size of government and to the pro-rich bias in public expenditure, and positively or negatively related to the marginal income tax, depending on substitutability between government supplied and market goods. These implications are validated using OECD data.

Formato

41

288395 bytes

application/pdf

Identificador

http://hdl.handle.net/2072/53345

Idioma(s)

eng

Relação

Working papers; 799.09

Direitos

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Palavras-Chave #Despeses públiques
Tipo

info:eu-repo/semantics/workingPaper