Empire Building and Fiscal Illusion? An Empirical Study of Government Official Behaviors in Takings
Journal of Empirical Legal Studies, Vol. 6, pp. 541-584, 2009
43 Pages Posted: 5 Mar 2008 Last revised: 11 Mar 2011
Date Written: December 31, 2008
There is an ongoing debate in the takings literature as to whether government officials minimize takings compensation or pay compensation to the extent that it maximizes their political interests. Until now there has been no empirical study of this question. Also, two methods of assessing takings compensation-one implemented by several states, the other proposed by scholars and has been implemented in a foreign jurisdiction-have been found to award inaccurate takings compensations to condemnees. There has been no empirical research, however, on a third assessment method, implemented in Taiwan. Using data on takings compensation and market value in Taiwan from 2000 to 2007, I empirically examined whether the Taiwanese assessment method (in which takings compensations are pre-determined by annual governmental assessments of property value) produces accurate compensation, and whether government officials minimize compensation or maximize their political interests. I found that about two-thirds of the takings compensations in Taiwan were below a reasonable proxy for a lower limit on market value and, therefore, inaccurate. Government officials could further reduce compensation payments but did not choose to do so. Condemnees were under-compensated because the more politically influential landowners have pressured the government to distort governmental assessments of property value to reduce their own tax burdens. Political interests are government officials' main concern.
Keywords: fiscal illusion, political costs and benefits, government officials, takings compensation, market value, local faction
JEL Classification: K11, K23
Suggested Citation: Suggested Citation