Income Taxes and Political Accountability

Oskar Nupia

Public Finance Review, 2024, vol. 52, issue 2, 253-283

Abstract: The idea that paying taxes makes politicians more accountable to citizens has long drawn the attention of scholars. This article contributes to the understanding of this relationship from a novel perspective: that it is elections rather than negotiations between politicians and elites—as most of the previous literature has assumed—that serve as the primary mechanism by which citizens discipline politicians. I build a voting agency model that considers two effects of income taxes on voters’ decisions: how changes in voters’ disposable income affect their political demands and how increments in tax revenues affect voters’ beliefs about the ability of institutions to affect incumbents’ decisions. I find that increments in taxes always strengthen voters’ political demands. Nevertheless, it would not necessarily prove useful for disciplining incumbents—in terms of a higher expected provision of public goods and lower captured rents. Gains in political accountability, in turn, positively affect the equilibrium income tax rate.

Keywords: income taxes; political accountability; voting agency; public goods; incumbent’s rents; institutions (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:52:y:2024:i:2:p:253-283

DOI: 10.1177/10911421231183755

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