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A THEORY OF THE POLITICALLY OPTIMAL COMMODITY TAX
Author(s) -
Seiglie Carlos
Publication year - 1990
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1990.tb01240.x
Subject(s) - economics , externality , commodity , enforcement , consumption (sociology) , public economics , tax revenue , revenue , microeconomics , indirect tax , optimal tax , ad valorem tax , monetary economics , double taxation , tax reform , market economy , law , finance , social science , sociology , political science
A theory of the politically optimal tax is developed where tax rates are endogenous and determined by forces in the political market. The theory is used to explain the levels of alcoholic beverage taxes between states in the United States. It is shown that these rates are influenced by the ownership structure existing in the liquor industry, the consumption externalities associated with drinking, the minimum drinking age laws, the earmarking of tax revenues, the enforcement of regulations and real income.