Capital Taxation and Electoral Accountability
Aidt, Toke S.
Cambridge Working Papers in Economics
Faculty of Economics
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Aidt, T. S., & Magris, F. (2004). Capital Taxation and Electoral Accountability. https://doi.org/10.17863/CAM.5194
In a representative democracy, voters can use elections to protect their property by holding politicians accountable for the tax policies they implement while in office. This paper demonstrates that performance voting can - partly or wholly - solve the capital levy problem. We characterise the �best� non-expropriating tax policies that can be sustained in a stationary Markov Perfect Equilibrium; show when this coincides with the second best tax policy; and discuss, in detail, the robustness of the result.
Classification-JEL: H21, D72, performance voting, capital taxation, time consistency
This record's DOI: https://doi.org/10.17863/CAM.5194
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