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Taxation and Expenditure Policies

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Inequality

Part of the book series: Palgrave Studies in Classical Liberalism ((PASTCL))

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Abstract

Entangled political economy depicts taxation and government expenditure as an emergent process, formulated by legislators and bureaucrats together with special interests and citizens. Whilst taxing and spending attempts to realise various policy objectives, it is not guaranteed that such activities will ameliorate inequality. Policies may implicitly encourage an upward, pro-rich redistribution, rather than pro-poor redistribution widely deemed as the desirable political objective.

This chapter illustrates how certain expenditure and taxation policies potentially worsen inequality outcomes. Economic inequalities are exacerbated when fiscal policy measures effectively redistribute income and wealth in an upward direction, or constrain economic mobility. Fiscal policy also performs poorly to the extent that political agents impose taxes, and disburse payments, on a discriminatory basis.

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Notes

  1. 1.

    Borrowing by political enterprises represents another major element of modern public sector financial management. Under this approach (current and capital), projects are financed today by issuing securities to domestic and international capital markets, but with the expectation that future governmental revenue streams will be of a sufficient magnitude to relieve the debt burden. The implications of the level and distribution of public debt for a functioning political economy have been canvassed at length by researchers in the public choice tradition, and much more recently by scholars versed in entangled political economy. For our purposes, we largely restrict our focus onto fiscal policies affecting presently existing persons.

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  1. RMIT University, Melbourne, VIC, Australia

    Mikayla Novak

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Novak, M. (2018). Taxation and Expenditure Policies. In: Inequality. Palgrave Studies in Classical Liberalism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-89417-1_4

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  • DOI: https://doi.org/10.1007/978-3-319-89417-1_4

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