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Tax Referenda and the Voluntary Exchange Model of Taxation: a Suggested Implementation

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Listed:
  • Randall G. Holcombe

    (Auburn University)

  • Paul C. Taylor

    (Virginia Polytechnic Institute and State University)

Abstract

The voluntary exchange model of taxation implies that taxes are the price paid for public sector output. The current public sentiment for tax reduction and tax reform suggests that the present structure of taxes does not conform to this voluntary exchange model. This article presents a simple method of holding a referendum in order to allow the taxpayers themselves to determine both the level and mix of governmental expenditures. The method is simple enough for voters to understand, and provides the incentive for all voters to state their true preferences. The implementation of such a referendum system would make the tax structure more closely resemble the voluntary exchange model of taxation.

Suggested Citation

  • Randall G. Holcombe & Paul C. Taylor, 1980. "Tax Referenda and the Voluntary Exchange Model of Taxation: a Suggested Implementation," Public Finance Review, , vol. 8(1), pages 107-114, January.
    • Handle: RePEc:sae:pubfin:v:8:y:1980:i:1:p:107-114
    DOI: 10.1177/109114218000800107
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    References listed on IDEAS

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    1. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    2. Tideman, T Nicolaus & Tullock, Gordon, 1976. "A New and Superior Process for Making Social Choices," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1145-1159, December.
    3. L. F. G. De Cazaux, 1965. "On The Budget," Journal of Accounting Research, Wiley Blackwell, vol. 3(2), pages 264-265.
    4. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Cited by:

    1. Jeffrey Zax, 1989. "Initiatives and government expenditures," Public Choice, Springer, vol. 63(3), pages 267-277, December.

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