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Public Finance and Public Choice

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  • Poterba, James M.

Abstract

This paper explores the contribution that public choice models can make to the traditional efficiency and distributional analyses of tax policy. It notes the relative lack of attention to political economy issues in public finance, at least in comparison with other policy-oriented subfields in economics. It then discusses two key insights that emerge from public choice models of taxation. The first is the notion that different tax systems may be associated with different opportunities for political rent seeking, and the second is the possibility that actual tax systems equate the marginal political cost of raising revenue from different tax instruments, rather than the marginal efficiency cost. The paper concludes with a brief discussion of the role of traditional efficiency and distributional analyses in contributing to tax policymaking, even in a political world.

Suggested Citation

  • Poterba, James M., 1998. "Public Finance and Public Choice," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 391-396, June.
    • Handle: RePEc:ntj:journl:v:51:y:1998:i:2:p:391-96
    DOI: 10.1086/NTJ41789334
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    References listed on IDEAS

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    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Buchanan, James M., 1993. "The Political Efficiency of General Taxation," National Tax Journal, National Tax Association, vol. 46(4), pages 401-10, December.
    3. Geoffrey Brennan, 1984. "Elements of a Fiscal Politics: Public Choice and Public Finance," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 17(3), pages 62-72, November.
    4. Winer, Stanley L. & Hettich, Walter, 1998. "What Is Missed If We Leave Out Collective Choice in the Analysis of Taxation," National Tax Journal, National Tax Association, vol. 51(n. 2), pages 373-89, June.
    5. Buchanan, James M., 1993. "The Political Efficiency of General Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(4), pages 401-410, December.
    6. Winer, Stanley L. & Hettich, Walter, 1998. "What Is Missed if We Leave Out Collective Choice in the Analysis of Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 373-389, June.
    7. Hettich, W. & Winer, S.L., 1993. "The Political Economy of Taxation," Papers 8, Carleton - Business Administration.
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    Cited by:

    1. Hsun Chu & Chu-Chuan Cheng & Yu-Bong Lai, 2015. "A political economy of tax havens," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(6), pages 956-976, December.
    2. Alfano, Vincenzo & De Simone, Elina & D’Uva, Marcella & Gaeta, Giuseppe Lucio, 2022. "Exploring motivations behind the introduction of tourist accommodation taxes: The case of the Marche region in Italy," Land Use Policy, Elsevier, vol. 113(C).
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    4. Ringa Raudla, 2010. "Governing budgetary commons: what can we learn from Elinor Ostrom?," European Journal of Law and Economics, Springer, vol. 30(3), pages 201-221, December.

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