Income taxes, political accountability and public goods provision

This paper proposes and analyzes an unexplored mechanism through which in- creases in income taxes -understood as increases in either marginal tax rates or tax progressivity- might positively affect the degree of political accountability (PA), and consequently, the provision of public goods (PG) in...

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Autor Principal: Nupia Martínez, Oskar Andrés
Formato: Desconocido (Unknown)
Lenguaje:Inglés (English)
Publicado: Universidad de los Andes, Facultad de Economía, CEDE 2018
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Acceso en línea:http://hdl.handle.net/1992/8864
id ir-1992-8864
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spelling ir-1992-88642020-09-16T20:23:29Z Income taxes, political accountability and public goods provision Impuestos a la renta, fiscalización política de los votantes y provisión de bienes públicos Nupia Martínez, Oskar Andrés Political accountability Income taxes Public goods Incumbent's rents Voting-agency Impuestos sobre la renta Auditoría fiscal - Modelos matemáticos Bienes públicos Elecciones - Análisis de beneficios D31, D72, H24, H42 This paper proposes and analyzes an unexplored mechanism through which in- creases in income taxes -understood as increases in either marginal tax rates or tax progressivity- might positively affect the degree of political accountability (PA), and consequently, the provision of public goods (PG) in a democratic environment. To do this, we build a voting-agency model with income-heterogeneous voters and different tax schedules. Our main result is that, in fact, the provided mechanism uncovers a direct link between income taxes and the degree of PA. A crucial condition for observing a positive effect of an increase in income taxes on both voters' political demands for PG and the provision of PG is that said increase must negatively affect the median voter's disposable income. If this does not occur, which may well be the case in low-income countries, the effect of an increase in income taxes on the degree of PA is ambiguous. We also explore how agency problems a affect the majority-voting equilibrium income tax rate. En este artículo se propone y se analiza un mecanismo no explorado a través del cual incrementos en el impuesto a la renta sobre personas naturales-entendido como incrementos en las tasas marginales de impuestos o en la progresividad del sistema-podrían afectar positivamente el grado de fiscalización política (FP) de los votantes y, por ende, la provisión de bienes públicos (BP) en un ambiente democrático. Para hacer el análisis, se construye un modelo de votación con fricciones de agencia, votantes heterogéneos en ingresos y diferentes sistemas impositivos. El principal resultado es que, de hecho, el mecanismo sugerido revela una relación directa entre impuestos a la renta y el grado de FP. Una condición crucial para observar un efecto positivo de un incremento en los impuestos a la renta sobre las demandas políticas de los votantes por BP y su provisión es que dicho incremento afecte negativamente el ingreso disponible del votante mediano. Si esto no ocurre, lo cual puede suceder en países de bajos ingresos, el efecto de un incremento en los impuestos sobre el grado de FP es ambiguo. En el documento también se explora cómo los problemas de agencia afectan la tasa impositiva de equilibrio en un modelo de votación. 2018-09-27T16:58:17Z 2018-09-27T16:58:17Z 2017 document publishedVersion 1657-5334 http://hdl.handle.net/1992/8864 1657-7191 eng Documentos CEDE No. 66 Noviembre de 2017 Al consultar y hacer uso de este recurso, está aceptando las condiciones de uso establecidas por los autores. openAccess Universidad de los Andes, Facultad de Economía, CEDE instname:Universidad de los Andes reponame:Repositorio Institucional Séneca
institution Universidad de los Andes
collection DSpace
language Inglés (English)
topic Political accountability
Income taxes
Public goods
Incumbent's rents
Voting-agency
Impuestos sobre la renta
Auditoría fiscal - Modelos matemáticos
Bienes públicos
Elecciones - Análisis de beneficios
D31, D72, H24, H42
spellingShingle Political accountability
Income taxes
Public goods
Incumbent's rents
Voting-agency
Impuestos sobre la renta
Auditoría fiscal - Modelos matemáticos
Bienes públicos
Elecciones - Análisis de beneficios
D31, D72, H24, H42
Nupia Martínez, Oskar Andrés
Income taxes, political accountability and public goods provision
description This paper proposes and analyzes an unexplored mechanism through which in- creases in income taxes -understood as increases in either marginal tax rates or tax progressivity- might positively affect the degree of political accountability (PA), and consequently, the provision of public goods (PG) in a democratic environment. To do this, we build a voting-agency model with income-heterogeneous voters and different tax schedules. Our main result is that, in fact, the provided mechanism uncovers a direct link between income taxes and the degree of PA. A crucial condition for observing a positive effect of an increase in income taxes on both voters' political demands for PG and the provision of PG is that said increase must negatively affect the median voter's disposable income. If this does not occur, which may well be the case in low-income countries, the effect of an increase in income taxes on the degree of PA is ambiguous. We also explore how agency problems a affect the majority-voting equilibrium income tax rate.
format Desconocido (Unknown)
author Nupia Martínez, Oskar Andrés
author_facet Nupia Martínez, Oskar Andrés
author_sort Nupia Martínez, Oskar Andrés
title Income taxes, political accountability and public goods provision
title_short Income taxes, political accountability and public goods provision
title_full Income taxes, political accountability and public goods provision
title_fullStr Income taxes, political accountability and public goods provision
title_full_unstemmed Income taxes, political accountability and public goods provision
title_sort income taxes, political accountability and public goods provision
publisher Universidad de los Andes, Facultad de Economía, CEDE
publishDate 2018
url http://hdl.handle.net/1992/8864
_version_ 1705932524690079744
score 11,828437