Public Finance Without Taxation: Free-Riding as Institutional Artifact

21 Pages Posted: 7 Mar 2013

See all articles by Richard E. Wagner

Richard E. Wagner

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: March 6, 2013

Abstract

Expositions of the theory of public finance mostly wrongly assume that taxation is necessary to finance public goods. Taxation isn't necessary to finance public goods because free riding is an institutional artifact of the analytical dichotomy between public and private goods, which prevents recognition of social interaction through the institutions of civil society. Free riding is also abetted through the particular institutional presumption that public goods must be provided by collective entities that operate without alienable ownership. Free riding is a product of a particular institutional arrangement and is not a universal quality of societal living together. There is a deep similarity between cities and such entities as hotels and malls which supply public goods without taxation. Center stage in the theory of public finance can alternatively be occupied by the social organization of shared consumption, with taxation relegated to side show status.

Keywords: free riding, forced carrying, preference revelation, collective property rights, institution-centered public finance, markets and public goods, civil society, political elites, ruling classes

JEL Classification: D23, D71, H20, H41

Suggested Citation

Wagner, Richard E., Public Finance Without Taxation: Free-Riding as Institutional Artifact (March 6, 2013). GMU Working Paper in Economics No. 13-05, Available at SSRN: https://ssrn.com/abstract=2229053 or http://dx.doi.org/10.2139/ssrn.2229053

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
334 Enterprise Hall
Fairfax, VA 22030
United States
(703) 993-1132 (Phone)

HOME PAGE: http://mason.gmu.edu/~rwagner/

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://ppe.mercatus.org/scholars/richard-wagner

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
312
Abstract Views
1,228
Rank
179,480
PlumX Metrics