The Power to Tax: Analytical Foundations of a Fiscal Constitution

Abstract

The Power to Tax is, I think, demonstrable proof of the value of genuine research collaboration across national-cultural boundaries. Geoffrey Brennan, as a golden-voiced ''wild colonial boy'' from Down Under, joined our research team in Blacksburg in the 1970s, and his enthusiasm quickly spilled over and generated joint efforts. We discovered that along many, but not all, dimensions of discourse, we were on the same wavelength. The Power to Tax is informed by a single idea-the implications of a revenue-maximizing government. The origins of the idea emerged first in a paper that we agreed to write jointly for a festschrift for Joseph Pechman. Once the idea existed, the book, more than any other of my experience, simply wrote itself. Perhaps, in part, this is how it seemed only to me, since Geoffrey Brennan was the coauthor who provided much of the sometimes difficult technical construction.

Taxation and citizen choice: The effect of a county charter on property taxes

“…Over time, the expectation of rationality, and its implication of a preference for lower taxes, has become commonplace in the literature. Not only did Hahn (1973) rely upon it for his theory of optimal taxation, but Brennan and Buchanan (1977, 1980) also incorporated it into their work on the power to tax, and Man and Bell (1996) relied upon the expectation in their work on the effect of sales taxes on property taxes. It has also been utilized in public administration, such as Cohen and Aviram (2021) work on street‐level bureaucracy and Perry's (2000) work on the theory of public service motivation.…”

Natural amenities and Neo-Hobbesian local public finance

“…In The Power to Tax, Brennan and Buchanan (1980) remark that locational rents-e.g., as a result of natural amenities-provide a potential surplus which a revenue maximizing local government will seek to exploit via high tax rates: "[T]he governmental jurisdiction that is most 'favorably situated' in terms of the generation of locational rents...opens up the prospect for the relatively greater degree of fiscal exploitation" (p.202). Given this acknowledgment, it is curious that Buchanan otherwise gives little thought to the possibility of exploitation of locational surplus by other interest groups.…”

A tale of two gravities*

“… 1 1 See Ang (2015), Bates, Greif, and Singh (2002), Carneiro (1970), Hobbes (1651), Tilly (1985), and de la Sierra (2020) on the origins of states; Aghion, Persson, and Rouzet (2019), Alesina and Reich (2015), Besley and Persson (2009), and Iyigun, Nunn, and Qian (2017) on state capacities; and Alesina and Spolaore (1997), Alesina and Spolaore (2005), Alesina and Spolaore (2006), Brennan and Buchanan (1980), Desmet, Le Breton, Ortuño‐Ortín, and Weber (2011), and Friedman (1977) on efficient state sizes. …”

“…BOWMAN et Al. and Iyigun, Nunn, and Qian (2017) on state capacities; and Alesina and Spolaore (1997), , Alesina and Spolaore (2006), Brennan and Buchanan (1980), Desmet, Le Breton, Ortuño-Ortín, andWeber (2011), andFriedman (1977) on efficient state sizes. 2 The type-1 extreme-value distribution is extensively used in statistics to model extreme events, such as maximum rainfall and drought.…”