Taxation shall be equal and uniform. (The Texas Constitution, Article 8, Sec. 1 (a))
Abstract
Tax schemes are more restricted by constitutional rules than subsidies. We introduce a model of public good provision with incentive problems in agenda-setting and identify several advantages of restrictions on tax schemes. In particular, tax rules may prevent the proposal and adoption of inefficient projects that benefit only a small minority. We also propose “redistribution efficiency” as a socially desirable property of proposals and find that tax rules guarantee this kind of efficiency. Moreover, a constitution that requires certain restrictions on both taxes and subsidies satisfies a criterion we label “robustness against counter-proposals.” We provide an axiomatic characterization of this constitution. Finally, we perform utilitarian welfare comparisons.
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Gersbach, H., Hahn, V. & Imhof, S. Tax rules. Soc Choice Welf 41, 19–42 (2013). https://doi.org/10.1007/s00355-012-0675-1
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DOI: https://doi.org/10.1007/s00355-012-0675-1