Tax Competition and Tax Coordination in a Median Voter Model

This paper analyzes the welfare effects of capital tax coordination in a simple model of fiscal competition where fiscal policy is subject to majority voting and households differ with respect to their labor and capital income. It turns out that a coordinated capital tax increase may raise or reduce welfare, depending on the relative magnitude of i) economic distortions induced by a labor tax and ii) political distortions resulting from the influence of the median voter on fiscal policy decisions. A negative welfare effect is more likely, the smaller the marginal excess burden of the labor tax and the smaller the ratio of the median voter's labor income to average labor income. We also use empirical estimates of the marginal excess burden of taxation to determine the welfare effects of tax coordination; it turns out that a negative welfare effect of coordinated tax increases may emerge in our model for empirically reasonable parameters.     

The Political Economy of Tax Coordination as a Bargaining Game Between Bureaucrats and Politicians

In the public finance literature, the view prevails that taxcompetition among countries gives rise to an underprovision ofpublic goods and that coordinated tax increases are thereforedesirable. Public choice arguments, in contrast, suggest thattax coordination may not be in the interest of thetaxpayers/citizens because imperfections of the politicalprocess (political distortions) may lead to a waste of taxmoney. According to this view, tax competition is a desirablecheck on the power to tax whereas tax coordination would onlyrelax the budget constraint of an inefficient public sector.The present paper integrates the underprovision argument andthe public choice view into a common theoretical framework.The government is assumed to consist of politicians andbureaucrats with diverging interests. Fiscal policy ismodelled as the outcome of a bargaining game between thebureaucrats and the politicians. It turns out that coordinatedtax increases always raise the provision of public goods butalso increase the cost of political distortions. The effect onthe welfare of the representative citizen may be positive ofnegative, depending in particular on the distribution ofbargaining power between bureaucrats and politicians.     

'This is the Time to Get in Front': Changing Roles and Opportunities for Women in Liberia

Most research on women in war focuses on female losses. Thisarticle demonstrates that wars may also bring gains. The scopeof political and economic roles that Liberian women performtoday appears to be larger than before the war. Both individuallyand collectively, certain women have gainfully used openingsthe war provided them. The article discusses the historicityof Liberian gender roles, examining the social subgroups ofpoliticians, businesswomen, women's organizations, employees,and school girls. Changes have also been fostered by the internationalpeace-building and development business. Although the realizationof female ambitions seems to be constrained by various institutionaland economic factors, Liberia may harbour a unique potentialfor sustainable shifts in gender roles.