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This paper moves toward the formulation of a normative theory of taxation that incorporates collective choice as an essential element. Such a theory has many interesting parallels to optimal taxation, including large information requirements for political agents. The paper discusses possible solutions to the information problem in a collective choice setting. The answer appears to lie in a decentralized information gathering and policy process rather than in the development of simplified guidelines for improving the decisions of central planners. The paper proposes a framework to examine the gains and losses in expected support from decentralized policy choices affecting taxation, and uses the analysis to discuss the influence of differences in constitutional structure on the adoption of informational strategies and to review the nature of tax reform.

In this chapter I provide an overview of the political economy of taxation in democratic states by considering the three most important issues in the field: (1) the evolution of the power to tax in (what are now) the mature constitutional democracies; (2) the nature and determinants of modern tax structures; and (3) redistribution in pluralistic societies over various horizons and in the face of economic shocks. The discussion considers the ideas and models that have arisen as scholars have grappled with these related issues, and points to some of the outstanding problems that may be worth pursuing in future research.

This work examines tax policies and tax systems as they arise from democratic choices, set against the background of a market economy. Professors Hettich and Winer find that democratic institutions yield complex tax systems with features that follow a varied but predictable pattern. In developing their analysis, the authors use formal modelling of voting behavior, emphasizing recent advances in the theory of probabilistic voting. This book differs from the available tax literature by relating fiscal choices directly to voting and by examining tax systems in democratic countries from a variety of perspectives. While the authors primarily focus on explaining observed features of tax systems, they also devote considerable space to the discussion of the welfare and efficiency effects of taxation in the presence of collective choice, and to a review of other models and of the related literature. In addition, they use computational general equilibrium analysis and statistical research on national and state governments in the US and Canada to link theory to empirical data