Political conflicts, the role of opposition parties, and the limits on taxation

Stephane Wolton ()

Journal of Theoretical Politics, 2015, vol. 27, issue 4, 570-587

Abstract: In democratic systems, the rich have diverse channels through which they can influence policies. In a model of taxation, I study the capacity of the rich to constrain the fiscal choice of a government by starting a costly political conflict (for example, a press campaign), which imposes a cost on the government and influences the fate of the government’s fiscal plan. I show that the government’s tax proposal depends critically on the marginal disutility of taxation for the rich. This approach provides a new rationale for the empirically documented U-shaped relationship between inequality and taxation. It also highlights a new role for opposition parties. By agreeing to bear part of the cost of a political conflict in exchange for compromise, the opposition makes Pareto-improving arrangements possible.

Keywords: Coalition; opposition party; political conflict; taxation (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jothpo:v:27:y:2015:i:4:p:570-587

DOI: 10.1177/0951629814559722

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