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Quotation of the Day…

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… is from page 72 of my colleague Richard Wagner’s excellent 2017 intellectual biography of Jim Buchanan, James M. Buchanan and Liberal Political Economy [2]:

Without a constitutional requirement of uniformity in taxation, post-constitutional politics will generate increasingly complex revenue systems as tax favors are granted and removed within the political marketplace. The resulting narrowing of the tax base warps processes of collective choice. For instance, those who are favored by the resulting fiscal discrimination will support more collective activity than they would otherwise support. With the continual churning of the tax code that results, however, most participants may end up worse off than they would have been under a simple system of tax uniformity.

DBx: This reality looms large among the economic and political-economy reasons for objecting to that species of competition among governments that resulted in Amazon choosing to locate its new HQ2 in Arlington, VA, and Queens, NY.

As Dick points out, not only does such cronyist competition among governments to attract businesses result in an unnecessarily complex tax code, it results also in a further weakening of the incentives of the private parties who win these special tax breaks to consider the costs of proposed future government programs and to compare these costs to the benefits of the programs. If I will shoulder only disproportionately small shares of the fiscal burden of proposed programs, I’m disproportionately likely to support – or at least not to object – to those programs.

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