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Taxation and Representation: The consequences of democratization and voter turnout for tax levels and structures from 1970-99

Reading for Tuesday, 27 February, by Jeff Timmons.

This paper decomposes government accounts to examine whether and how representation affects the level and distribution of data.  Using panel data for 106 countries from 1970-1999 and cross-sectional data for approximately 75 democracies from 1990-98, we find that both democratization and voter turnout induced a modest but highly systematic increase in revenue from broad-based, albeit regressive taxes on consumption.  Part of the increase due to democratization reflects a shift from more inefficient and similarly regressive taxes on trade, but most of it was new revenue.  Less convincingly, democratization and voter turnout also increased total tax revenue from progressive taxes on income and capital.  With fairly reasonable assumptions about tax incidence, tax design and participation patterns, these findings shed light on several competing conceptions of the consequences of representation for taxation.

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