Controlling leviathan through tax reduction

Michael Marlow and William Orzechowski

Public Choice, 1988, vol. 58, issue 3, 237-245

Abstract: Our paper seeks the strategy that allows the greatest ability to reduce public sector size within a political environment that does not want us to directly set limits on public sector size. Tax reduction, through its quid pro quo effect, offers high tangibility to taxpayers and may raise political power of groups that seek both tax reduction and greater opposition to lobbies that seek spending increases for their narrowly-defined interests. Moreover, as Manage and Marlow (1986) argues, since the political response to balanced budget rules is likely to raise taxes, this political bias of tax hikes suggests that balanced budget rules are offered as a means of changing the funding mix and not the actual budget constraint of government. Our analysis should not be construed as a statement promoting deficit finance. Preferred policy is one that forces tax reduction, a balanced budget and price stability. However, this is ‘optimal’ only in a world without political constraints and special interests seeking public funds. Hard second-best choices, based on available analytical and empirical evidence, suggest that tax reduction controls the most important element of the budget constraint and that we should not rely solely on balanced budget rules to solve the underlying public sector growth problem. Copyright Kluwer Academic Publishers 1988

Date: 1988
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1007/BF00155669 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:58:y:1988:i:3:p:237-245

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/BF00155669

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().