Majority Choice of Tax Systems in Single- and Multi-Jurisdictional Economies

45 Pages Posted: 8 Jun 2015 Last revised: 5 Jan 2022

See all articles by Stephen Calabrese

Stephen Calabrese

University of South Florida - Department of Government and International Affairs; Carnegie Mellon University - David A. Tepper School of Business

Dennis Epple

Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Richard E. Romano

University of Florida - Warrington College of Business Administration - Department of Economics

Date Written: June 2015

Abstract

We examine majority choice of tax instruments in single- and multi-jurisdictional economies with heterogeneous households. In our framework majority voting equilibrium exists despite the multidimensional policy choice set. We identify five competing incentives that influence choice of tax instruments. Equilibria generally entail a mixture of tax types. With multiple jurisdictions, strong reliance on head taxation in rich communities arises to deter poorer households from immigrating. Mobility fundamentally affects the equilibrium tax system with redistribution incentives dominating choice of instruments when mobility is limited. Limiting or eliminating head taxation fundamentally alters stratification, public good provision levels, and tax systems.

Suggested Citation

Calabrese, Stephen and Epple, Dennis and Romano, Richard E., Majority Choice of Tax Systems in Single- and Multi-Jurisdictional Economies (June 2015). NBER Working Paper No. w21231, Available at SSRN: https://ssrn.com/abstract=2615637

Stephen Calabrese (Contact Author)

University of South Florida - Department of Government and International Affairs ( email )

Tampa, FL 33620
United States

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Dennis Epple

Carnegie Mellon University ( email )

Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Munich, DE-81679
Germany

Richard E. Romano

University of Florida - Warrington College of Business Administration - Department of Economics ( email )

Gainesville, FL 32611-7140
United States
(352) 392-4812 (Phone)

HOME PAGE: http://www.cba.ufl.edu/faculty/facultyinfo.asp?WEBID=321

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