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The Political Costs of Taxes and Government Spending

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  • Stuart Landon
  • David L. Ryan

Abstract

The marginal political costs of different types of taxes and government spending, as well as voter preferences over different fiscal variables, are examined using two different specifications for political cost--one based on the probability of incumbent defeat and the other based on the incumbent's percentage of the vote. Models associated with these two specifications, in which voting behavior depends on disaggregated taxes and government expenditures, are estimated using data from Canadian provincial elections. The empirical results, which indicate that different types of taxes and expenditures have quite different marginal political costs, have important implications for models that incorporate voter preferences.

Suggested Citation

  • Stuart Landon & David L. Ryan, 1997. "The Political Costs of Taxes and Government Spending," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 85-111, February.
    • Handle: RePEc:cje:issued:v:30:y:1997:i:1:p:85-111
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    Citations

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    Cited by:

    1. Esteller-More, Alex & Sole-Olle, Albert, 2001. "Vertical income tax externalities and fiscal interdependence: evidence from the US," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 247-272, April.
    2. Schady, Norbert R., 1999. "Seeking votes - the political economy of expenditures by the Peruvian Social Fund (FONCODES), 1991-95," Policy Research Working Paper Series 2166, The World Bank.
    3. Núria Bosch & Albert Solé-Ollé, 2007. "Yardstick competition and the political costs of raising taxes: An empirical analysis of Spanish municipalities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 71-92, February.
    4. Geys, Benny & Vermeir, Jan, 2008. "The political cost of taxation: new evidence from German popularity ratings [Besteuerung und Popularität von Politikern: Neue Ergebnisse für die Deutsche Bundesregierung 1978-2003]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-06, WZB Berlin Social Science Center.
    5. Núria Bosch & Albert Solé-Ollé, 2007. "Yardstick competition and the political costs of raising taxes: An empirical analysis of Spanish municipalities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 71-92, February.
    6. Jonathan R. Kesselman, 1998. "Economics versus Politics in Canadian Payroll Tax Policies," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 381-387, September.
    7. Ionut Cotoc & Alok Johri & Cesar Sosa-Padilla, 2018. "Debt, Defaults and Dogma: politics and the dynamics of sovereign debt markets," 2018 Meeting Papers 1125, Society for Economic Dynamics.
    8. Benny Geys & Jan Vermeir, 2008. "Taxation and presidential approval: separate effects from tax burden and tax structure turbulence?," Public Choice, Springer, vol. 135(3), pages 301-317, June.
    9. Konishi, Hideki, 2006. "Spending cuts or tax increases? The composition of fiscal adjustments as a signal," European Economic Review, Elsevier, vol. 50(6), pages 1441-1469, August.
    10. Bharatee Dash & Angara Raja, 2014. "Do political determinants affect revenue collection? Evidence from the Indian states," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 253-278, September.
    11. David L. Ryan & Stuart Landon, 1998. "The Political Costs of Tax Reform: A Canadian Perspective," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 5(1), pages 37-48.
    12. Douglas Kriner & Breanna Lechase & Rosella Cappella Zielinski, 2018. "Self-interest, partisanship, and the conditional influence of taxation on support for war in the USA," Conflict Management and Peace Science, Peace Science Society (International), vol. 35(1), pages 43-64, January.

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