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Machiavellian Taxation? Political and economic determinants of public service financing
Unformatted Document Text:  1 Machiavellian Taxation? Political and economic determinants of public service financing G ERM À B EL (Harvard University and Universitat de Barcelona) &A NTONIO M IRALLES (Boston University) First draft: September 2004This draft: August 2005 Abstract: In this paper, we develop a simple theoretical model in order to explain how politicians choose between progressive and regressive tax schemes that serve to afford some local service productioncosts. It consists of a bipartisan model in which each party ’s preferences are lexicographic, giving priority to winning but following ideological preferences given that it wins. Concerning voters, thismodel distinguishes for the first time in the literature between pragmatic majorities and social ones,and predicts what happens when both majorities have the same ideological sign and what happenswhen these majorities are in conflict. “Pragmatic” refers to local-specific considerations regarding general performance of the government while “social” makes reference to issues related to voters’ wealth status and social class. While party ’s identity follows from pragmatic considerations, tax policies becomes a moderate equilibrium between ideological ruling party ’s preferences and social majority ’s ones. A tax policy would be extreme (either progressive or conservative) if and only if both social majority and pragmatic majority (ruling party) are of the same ideological sign. Thesepredictions are successfully tested by Tobit regression through the use of a wide sample ofmunicipalities concerning waste collection and treatment service-specific deficits. JEL Codes: H71, H20, H30. Keywords: Tax choice, voting model, local public goods. Contact Address:Germ à Bel John F. Kennedy School of Government - Harvard UniversityTaubman Center for State and Local Government 79 JFK StreetCambridge, MA 02138,United Statese-mail: ## email not listed ##Tel: 1.(607).2293941 Fax: Fax: 1. (617). 496-1722 The Spanish Commission of Science and Technology (CICYT, BEC2003-01679) has financially supported the research for this paper. Germ à Bel also aknowledges support from the Rafael del Pino Foundation. This paper has been presented in the 2005 Western Political Science Associaction Meeting, the 2005 Western Social Science AssocaitionConference, and the 2005 Canadian Public Economic Group Conference. We thank Steve Coate, Kenneth Fernandez,Douglas J. McCready, Steeve Mongrain, and Jason Snyder for useful comments and suggestions. id19379676 pdfMachine by Broadgun Software - a great PDF writer! - a great PDF creator! - http://www.pdfmachine.com http://www.broadgun.com

Authors: Bel, Germa. and Miralles, Antonio.
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1
Machiavellian Taxation?
Political and economic determinants of public service financing
G
ERM
À
B
EL
(Harvard University and Universitat de Barcelona) &
A
NTONIO
M
IRALLES
(Boston University)
First draft: September 2004
This draft: August 2005
Abstract:
In this paper, we develop a simple theoretical model in order to explain how politicians choose
between progressive and regressive tax schemes that serve to afford some local service production
costs. It consists of a bipartisan model in which each party
’s preferences are lexicographic, giving
priority to winning but following ideological preferences given that it wins. Concerning voters, this
model distinguishes for the first time in the literature between pragmatic majorities and social ones,
and predicts what happens when both majorities have the same ideological sign and what happens
when these majorities are in conflict.
“Pragmatic” refers to local-specific considerations regarding
general performance of the government while
“social” makes reference to issues related to voters’
wealth status and social class. While party
’s identity follows from pragmatic considerations, tax
policies becomes a moderate equilibrium between ideological ruling party
’s preferences and social
majority
’s ones. A tax policy would be extreme (either progressive or conservative) if and only if
both social majority and pragmatic majority (ruling party) are of the same ideological sign. These
predictions are successfully tested by Tobit regression through the use of a wide sample of
municipalities concerning waste collection and treatment service-specific deficits.
JEL Codes: H71, H20, H30.
Keywords: Tax choice, voting model, local public goods.
Contact Address:
Germ
à Bel
John F. Kennedy School of Government - Harvard University
Taubman Center for State and Local Government
79 JFK Street
Cambridge, MA 02138,
United States
e-mail: ## email not listed ##
Tel: 1.(607).2293941
Fax: Fax: 1. (617). 496-1722
The Spanish Commission of Science and Technology (CICYT, BEC2003-01679) has financially supported the
research for this paper. Germ
à Bel also aknowledges support from the Rafael del Pino Foundation. This paper has been
presented in the 2005 Western Political Science Associaction Meeting, the 2005 Western Social Science Assocaition
Conference, and the 2005 Canadian Public Economic Group Conference. We thank Steve Coate, Kenneth Fernandez,
Douglas J. McCready, Steeve Mongrain, and Jason Snyder for useful comments and suggestions.
id19379676 pdfMachine by Broadgun Software - a great PDF writer! - a great PDF creator! - http://www.pdfmachine.com http://www.broadgun.com


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