Working Paper

Voting and Nonlinear Taxes in a Stylized Representative Democracy

Henning Bohn, Charles Stuart
CESifo, Munich, 2003

CESifo Working Paper No. 1058

We derive median-voter results and study the shape of redistributional taxes when voters elect a candidate who imposes taxes to maximize own utility. Under general conditions, a median-productivity candidate is a Condorcet winner. The imposed tax function is nonlinear, may place high marginal rates on very low incomes, and may have an interval of negative marginal rates below the income of the winning candidate. Marginal rates are positive throughout, however, if non-redistributional spending or altruism toward the poor are great enough.