Universalization and the Origins of Fiscal Capacity

Esteban Mu\~noz-Sobrado

Papers from arXiv.org

Abstract: This paper proposes a model of tax compliance and fiscal capacity grounded in universalization reasoning. Citizens partially internalize the consequences of concealment by imagining a world in which everyone acted similarly, linking their compliance decisions to the perceived effectiveness of public spending. A selfish elite chooses between public goods and private rents, taking compliance as given. In equilibrium, citizens' moral internalization expands the feasible tax base and induces elites to allocate resources toward provision rather than appropriation. When the value of public spending is uncertain, morality enables credible reform: high-value elites can signal their type through provision, prompting citizens to increase compliance and raising fiscal capacity within the same period. The analysis thus identifies a moral channel through which states may escape low-capacity traps even under weak institutions.

Date: 2025-10
New Economics Papers: this item is included in nep-iue
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2510.17481 Latest version (application/pdf)

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:arx:papers:2510.17481

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().