Working Paper: NBER ID: w24279
Authors: Andrea Mattozzi; Erik Snowberg
Abstract: We develop a theory of taxation and the distribution of government spending in a citizen-candidate model of legislatures. Individuals are heterogeneous in two dimensions: productive ability in the private sector and negotiating ability in politics. When these are positively correlated, rich voters always prefer a rich legislator, but poor voters face a trade-off. A rich legislator will secure more pork for the district, but will also prefer lower taxation than the poor voter. Our theory organizes a number of stylized facts across countries about taxation and redistribution, parties, and class representation in legislatures. We demonstrate that spending does not necessarily increase when the number of legislators increases, as the standard common-pool intuition suggests, and that many policies aimed at increasing descriptive representation may have the opposite effect.
Keywords: Taxation; Representation; Legislators; Political Economy
JEL Codes: D72; D78; H10; H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rich legislators (D72) | effective legislators (D72) |
| effective legislators (D72) | preference among voters for rich legislators (D72) |
| preference among voters for rich legislators (D72) | securing more resources for districts (H77) |
| securing more resources for districts (H77) | lower overall tax rates in the US (H29) |
| number of legislators increases (D72) | individual legislators' ability to influence tax policy diminishes (H29) |
| individual legislators' ability to influence tax policy diminishes (H29) | unique equilibrium where all districts elect rich legislators (D72) |
| unique equilibrium where all districts elect rich legislators (D72) | lower tax rates overall (H29) |