Working Paper: NBER ID: w24123
Authors: Felix Bierbrauer; Aleh Tsyvinski; Nicolas D. Werquin
Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties face a trade-off between maximizing their base and getting their supporters out to vote. We study the implications of this framework for non-linear income taxation. In equilibrium, both parties propose the same tax policy. This equilibrium policy is a weighted combination of two terms, one reflecting the parties’ payoff from mobilizing their own supporters, one reflecting the payoff from demobilizing the supporters of the other party. The key determinant of the equilibrium policy is the distribution of the voters’ party attachments rather than their propensity to swing vote. Our analysis also provides a novel explanation for why even left-leaning parties may not propose high taxes on the rich.
Keywords: Political Competition; Endogenous Turnout; Tax Policy
JEL Codes: D72; D82; H21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| party strategies (D72) | voter turnout (K16) |
| party strategies (D72) | electoral outcomes (K16) |
| distribution of party attachments (D79) | equilibrium tax policy (H29) |
| party proposals (similar) (D72) | turnout of supporters (D79) |
| high taxes on the rich (proposed by left-leaning parties) (H29) | demobilize own supporters (D74) |
| electoral chances (K16) | tax proposals (higher taxes when not expected to win) (H29) |
| political equilibrium tax policies (H29) | symmetric proposals (C78) |
| party strategies (D72) | welfare-maximizing tax systems (deviation) (H21) |