Friday, October 7, 2011

Obama’s proposed Tax Increase aka “Jobs Bill”: political science vs. public choice theory

Obama’s shallow debate points/talking points regarding his “Jobs Bill” and its funding through additional taxes find their basis in the political science concepts of “society” [actually existing rather than merely an abstract idea] and the greater good of politics [the altruistic supposed end game of politics according to political science]. Leaving the realm of political science and entering the realm of public choice theory, Obama's tax proposal and consequential rhetoric is really based on the concept that an individual will support more public goods when not confronted with a cost [the cost borne by others aka millionaire tax].

The economist does, normally, attribute precise meaning to the terms "more" and "less." Moreover, if a similar model of rational behaviour is extended to the collective-choice process, we are able to derive propositions about individual behaviour that are parallel to those contained in economic theory. If the hypotheses are valid, the representative individual should, when confronted with relevant alternatives, choose more "public goods" when the "price" of these is lowered, other relevant things remaining the same. In more familiar terms, this states that on the average the individual will vote for "more" collective activity when the taxes he must pay are reduced, other things being equal. On the contrary, if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity. In a parallel way, income-demand propositions can be derived. If the income of the individual goes up and his tax bill does not, he will tend to choose to have more "public goods."  - James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

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