Studies of public finance, as traditionally developed, have
analyzed the effects of fiscal institutions on the market-choice
behavior of individuals and firms, but this book takes a different
approach. It analyzes the effects of fiscal institutions on the
political-choice behavior of individuals as they participate
variously in the decision-making processes of democracies.
What effect will the form of a new tax have on individuals'
attitudes toward more or less public spending? To what extent does
the private sector--public sector mix depend on the way in which
tax payments are made? How do the various taxes affect the fiscal
consciousness of individual citizens? These are questions that have
been ignored for the most part. They are, nonetheless, important
and worthy of examination. This book is an attempt to provide some
provisional answers. By the use of simplified models of existing
tax institutions, Buchanan predicts the effects that these exert on
individual behavior in the area of political choice. The relative
effects of direct and indirect taxes, the "old tax--new tax"
distinction, the effects of fiscal earmarking, the effects of
unbalanced budgets -- these are a few of the topics examined.
Before these questions can be fully answered, research must be
conducted to find out just how much individuals know about the
taxes they pay and the benefits they receive. Comparatively little
research of this kind has been completed, but the author devotes a
chapter to a careful review of the present state of this sort of
research.
Individuals' choice among alternative fiscal institutions is
examined in the second part of the book. If given the opportunity,
how would the individual choose to pay his or her taxes?
Progressive income taxes, excise taxes, and public debt are
analyzed in terms of this question.
Because of its interdisciplinary approach, this imaginative study
will be of interest to both economists and political
scientists.