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Tax Structure and Public Spending ‐ Or How the Electorate Is Deceived into Paying for Bigger Public Spending than It Really Wants
Author(s) -
Kristensen Ole P.
Publication year - 1986
Publication title -
scandinavian political studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.65
H-Index - 41
eISSN - 1467-9477
pISSN - 0080-6757
DOI - 10.1111/j.1467-9477.1986.tb00353.x
Subject(s) - public spending , boom , economics , recession , consumer spending , government spending , monetary economics , illusion , visibility , public economics , economic policy , macroeconomics , market economy , political science , welfare , politics , physics , optics , neuroscience , environmental engineering , biology , law , engineering
It is a classical proposition that tax structure may influence public spending. Two such propositions concerning the visibility and the elasticity of the tax system are tested. Visibility is not important while highly elastic tax systems are correlated with big public spending in times of economic boom. In times of economic decline and recession, high spending countries turn to deficit financing. In both cases big spenders seem to rely more upon a dose of fiscal illusion than moderate spenders.