IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v62y1989i1p41-61.html
   My bibliography  Save this article

Interest group demand for taxation

Author

Listed:
  • William Hunter
  • Michael Nelson

Abstract

Researchers have typically ignored the determinants of the tax structure of the public sector. Political scientists have concentrated their analyses on the expenditure side of the public ledgers while economists have avoided the issue by assuming that taxes are exogenously determined. In this paper we have shown that a behavioral model of political interest groups can be employed to gain insights into the political selection of taxes. The theory provides a general complement to the well-documented analysis of special interest demand for public expenditures. Our analysis raises several important policy questions. First, is the influence of interest groups on the determination of tax systems desirable from a public policy perspective? For example, special interest groups dominated by high and middle income individuals may prefer regressive tax systems which reduce their own tax burden. Certainly the impact of interest groups on the well-known regressivity of state and local tax systems is an area worthy of additional investigation. Second, does the influence of interest groups lead to tax systems that unduly hamper economic efficiency and retard economic growth? For example, governments with economies dominated by a single industry may forsake diversity and economic development by selecting a tax system favorable to the major industry. Interest group demand for taxes may be a factor in explaining long run regional cycles such as the rise and fall of heavy manufacturing states such as the upper midwest. This research has established that a link exists between special interest group demand for taxation and the structure of local tax systems. However, the extent to which these groups influence tax systems and the exact nature of this influence requires further research. Additional research may also provide insights into the control (e.g., constitutional or legislative) of interest group influence on taxes should it be determined that such control is necessary. Copyright Kluwer Academic Publishers 1989

Suggested Citation

  • William Hunter & Michael Nelson, 1989. "Interest group demand for taxation," Public Choice, Springer, vol. 62(1), pages 41-61, July.
    • Handle: RePEc:kap:pubcho:v:62:y:1989:i:1:p:41-61
    DOI: 10.1007/BF00168013
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF00168013
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF00168013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hansen, John Mark, 1985. "The Political Economy of Group Membership," American Political Science Review, Cambridge University Press, vol. 79(1), pages 79-96, March.
    2. Denzau, Arthur T. & Munger, Michael C., 1986. "Legislators and Interest Groups: How Unorganized Interests Get Represented," American Political Science Review, Cambridge University Press, vol. 80(1), pages 89-106, March.
    3. Hawthorne, Michael R. & Jackson, John E., 1987. "The Individual Political Economy of Federal Tax Policy," American Political Science Review, Cambridge University Press, vol. 81(3), pages 757-774, September.
    4. Albert Breton, 1974. "The economic theory of representative government: A reply," Public Choice, Springer, vol. 20(1), pages 129-133, December.
    5. Hettich, Walter & Winer, Stanley, 1984. "A positive model of tax structure," Journal of Public Economics, Elsevier, vol. 24(1), pages 67-87, June.
    6. David Sjoquist, 1981. "A median voter analysis of variations in the use of property taxes among local governments," Public Choice, Springer, vol. 36(2), pages 273-285, January.
    7. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    8. John Mikesell, 1978. "Election periods and state tax policy cycles," Public Choice, Springer, vol. 33(3), pages 99-106, January.
    9. Ronald G. Bodkin, 1974. "Additively Consistent Relationships for Personal Savings and the Categories of Consumption Expenditures, U.S.A., 1949-1963," Eastern Economic Journal, Eastern Economic Association, vol. 1(1), pages 20-51, January.
    10. Litvack, James M & Oates, Wallace E, 1970. "Group Size and the Output of Public Goods: Theory and Application to State-Local Finance in the United States," Public Finance = Finances publiques, , vol. 25(1), pages 42-62.
    11. G. K. Helleiner, 1977. "The Political Economy of Canada's Tariff Structure: An Alternative Model," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 318-326, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mukherjee, Sacchidananda, 2022. "Trends and Patterns of Tax Expenditures on Union Taxes in India," Working Papers 22/380, National Institute of Public Finance and Policy.
    2. repec:dgr:rugsom:99e05 is not listed on IDEAS
    3. Volkerink, Bjørn & Haan, Jakob de, 1999. "Political and institutional determinants of the tax mix : an empirical investigation for OECD countries," Research Report 99E05, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    4. Frangois Vaillancourt, 1992. "Subnational Tax Harmonization, Canada and the United States: Intent, Results, and Consequences," NBER Chapters, in: Canada-U.S. Tax Comparisons, pages 323-358, National Bureau of Economic Research, Inc.
    5. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    6. Michael Marlow & William Orzechowski, 1997. "The Separation of Spending from Taxation: Implications for Collective Choices," Constitutional Political Economy, Springer, vol. 8(2), pages 151-163, June.
    7. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kym Anderson, 1980. "The Political Market for Government Assistance to Australian Manufacturing Industries," The Economic Record, The Economic Society of Australia, vol. 56(153), pages 132-144, June.
    2. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    3. Juan Carlos Berganza, 1998. "Relationships Between Politicians and Voters Through Elections: A Review Essay," Working Papers wp1998_9809, CEMFI.
    4. Partha Gangopadhyay & Shyam Nath, 2001. "Bargaining, Coalitions and Local Expenditure," Urban Studies, Urban Studies Journal Limited, vol. 38(13), pages 2379-2391, December.
    5. Genser, Bernd & Weck-Hannemann, Hannelore, 1992. "Fuel taxation in EC counties: A political economy approach," Discussion Papers, Series II 192, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    6. Hummel Jeffrey Rogers & Lavoie Don, 1994. "National Defense And The Public-Goods Problem," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 5(2-3), pages 353-378, June.
    7. Trofimov, Ivan D., 2017. "Political economy of trade protection and liberalization: in search of agency-based and holistic framework of policy change," MPRA Paper 79504, University Library of Munich, Germany.
    8. Dennis Mueller & Peter Murrell, 1986. "Interest groups and the size of government," Public Choice, Springer, vol. 48(2), pages 125-145, January.
    9. Michael A. Nelson, 2000. "Electoral Cycles and the Politics of State Tax Policy," Public Finance Review, , vol. 28(6), pages 540-560, November.
    10. Stadelmann, David & Portmann, Marco & Eichenberger, Reiner, 2013. "Quantifying parliamentary representation of constituents’ preferences with quasi-experimental data," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 170-180.
    11. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    12. Francisco Arcelus & Gary Mauser & Z. Spindler, 1978. "The right to vote no: revising the voting system and resuscitating the F-Y voter," Public Choice, Springer, vol. 33(4), pages 67-83, December.
    13. 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.
    14. Stadelmann, David & Torrens, Gustavo, 2020. "Who is the ultimate boss of legislators: Voters, special interest groups or parties?," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224562, Verein für Socialpolitik / German Economic Association.
    15. Stratmann, Thomas, 1996. "How Reelection Constituencies Matter: Evidence from Political Action Committees' Contributions and Congressional Voting," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 603-635, October.
    16. Peter Calcagno & John Jackson, 2008. "PAC Spending and Roll Call Voting in the U.S. House: An Empirical Extension," Economics Bulletin, AccessEcon, vol. 4(25), pages 1-11.
    17. Yujiro Hayami, 1990. "La Communauté rurale, le Marché et l'Etat," Économie rurale, Programme National Persée, vol. 196(1), pages 49-56.
    18. Alberto Sole Olle, 1998. "The effects of tax deductibility on the mix of property taxes and use charges: an empirical analysis of the spanish case," Working Papers in Economics 41, Universitat de Barcelona. Espai de Recerca en Economia.
    19. Bellemare, Marc F. & Carnes, Nicholas, 2015. "Why do members of congress support agricultural protection?," Food Policy, Elsevier, vol. 50(C), pages 20-34.
    20. Thomas A. Garrett & Russell M. Rhine, 2006. "On the size and growth of government," Review, Federal Reserve Bank of St. Louis, vol. 88(Jan), pages 13-30.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:62:y:1989:i:1:p:41-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.