Taxation and the Rational Theory of Size of Government in Multi-Electorate Political Systems: The Median of the Medians is King
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Standard treatments of the politics of taxation and the determinants of the size of government draw on the median voter theorem, which assumes that the voting population is effectively a single electorate (see, for example, Meltzer and Richard, 1981). However, in a multi-electorate political system such as Australia's, the policy preferred by the median voter of the entire population will not be stable - the bliss point of the overall median voter will not emerge as a Condorcet winner in a series of pairwise multi-electorate contests. Instead, the Condorcet winner is found by identifying the median voter in each separate electorate, arranging these medians in increasing order, then identifying the median of these medians. The policy distance between this 'median of medians' and the overall median can be very large. In other words, it is possible for 'extreme' policies to emerge as political equilibria. The article discusses the implications of these results for political competition, taxation policy and the size of government.
Journal of the Australasian Tax Teachers Association
© 2014 Australasian Tax Teachers Association (ATTA). The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Public Economics- Public Choice
Public Economics- Taxation and Revenue