The Uneasy Case for the Flat Tax

32 Pages Posted: 26 Jul 1999

See all articles by F. H. Buckley

F. H. Buckley

George Mason University - Antonin Scalia Law School

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: July 13, 1999

Abstract

Social contract theories assume that because personal security and private property are at risk in a state of nature, citizens will agree to grant Leviathan a monopoly of violence. But what is to prevent Leviathan from turning on his citizens once they have lain down their arms? The social contract leaves citizens worse off unless Leviathan can fetter himself, as constitutional democracies seek to do. Self-binding fetters are hard to find. We suggest that schemes of progressive taxation, in which marginal tax rates increase with taxable income, may be useful incentives to realign Leviathan?s incentives with those of his citizens. Income taxes give Leviathan an equity claim in his state?s economy, and progressive taxes give him a greater residual interest in upside payoffs. Leviathan will then demand higher side payments from interest groups before he imposes value-destroying regulations.

Note: A revised version of this working paper is forthcoming in Constitutional Political Economy

JEL Classification: H00, H11, H21, H50, L50, L51, P00

Suggested Citation

Buckley, Francis (Frank) H. and Rasmusen, Eric Bennett, The Uneasy Case for the Flat Tax (July 13, 1999). Available at SSRN: https://ssrn.com/abstract=170696 or http://dx.doi.org/10.2139/ssrn.170696

Francis (Frank) H. Buckley

George Mason University - Antonin Scalia Law School ( email )

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Eric Bennett Rasmusen (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

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