Voting over Taxes and Expenditure: The Role of Home Production

John Creedy and Solmaz Moslehi ()

No 1052, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper investigates, first, how allowance for subsistence activities, or home production, affects the standard results in models involving the majority choice of the tax rate in a flat tax—basic income scheme. The paper extends the analysis of home production to choices regarding the composition of government expenditure, in situations where there is a tax-financed pure public good in addition to a transfer payment, conditional on a given tax rate. The effect of home production is to reduce the transfer payment in each model, but the effect is small.

Pages: 21 pages
Date: 2008
New Economics Papers: this item is included in nep-pbe
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