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Tax choice

In public choice theory, tax choice (sometimes called taxpayer sovereignty[1] or earmarking[2]) is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of consumer choice to public finance. They claim taxpayers react positively when they are allowed to allocate portions of their taxes to specific spending.[3][4][5]


  • Opinions concerning tax choice 1
  • Optimal quantities of public goods 2
  • Foot voting vs tax choice 3
  • Tax choice legislative measures 4
  • See also 5
  • References 6
  • Further reading 7

Opinions concerning tax choice

Daniel J. Brown[6] examines tax-target plans in educational programs.

Alan Peacock, in his 1961 book The Welfare Society, advocates greater diversity in public services (education, housing, hospitals).

Optimal quantities of public goods

According to Vincent and Elinor Ostrom, it is possible that government may oversupply, and a market arrangement may undersupply, those public goods for which exclusion is not feasible.[7][8]

Foot voting vs tax choice

Voting with your feet and voting with your taxes are two methods that allow taxpayers to reveal their preferences for public policies. Foot voting refers to where people move to areas that offer a more attractive bundle of public policies. In theory foot voting would force local governments to compete for taxpayers. Tax choice, on the other hand, would allow taxpayers to indicate their preferences with their individual taxes.

In the Tiebout model, for example, there is costless mobility; individuals seek out a jurisdiction that provides exactly the level of output of the public good that they wish to consume. In so doing, they reveal their preferences for "local" public outputs and generate a Pareto-efficient outcome in the public sector. – Wallace E. Oates, On the Theory and Practice of Fiscal Decentralization

Tax choice legislative measures

Four bills providing involving tax choice have been introduced by Congress since 1971. The Presidential Election Campaign Fund, enacted in 1971, allows taxpayers to allocate $3 of their taxes to presidential election campaigns. The 2000 Taxpayers’ Choice Debt Reduction Act would have allowed taxpayers to designate money toward reduction of the national debt.[9] The 2007 Opt Out of Iraq War Act would have allowed taxpayers to designate money toward certain social programs.[10] The 2011 Put Your Money Where Your Mouth Is Act would have allowed taxpayers to make voluntary contributions (not tax payments) to the government.[11][12] These later bills died in committee.

See also


  1. ^ Brown, Daniel J. (Fall 1979). "The Case for Tax-Target Plans". Journal of Education Finance (University of Illinois Press) 5 (2): 215. Retrieved January 26, 2013. For educators, these "new" values reflect a demand for taxpayer sovereignty, greater choice among educational programs, and more responsiveness on the part of educational systems. 
  2. ^ The Economics of Earmarked Taxes(subscription required)
  3. ^ Democracy Journal
  4. ^ Do Earmarks Increase Giving to Government?
  5. ^ Science Direct
  6. ^ The Case For Tax-Target Plans
  7. ^ Kennett, Patricia (2008). Governance, globalization and public policy. Edward Elgar Publishing. p. 56. ISBN 978-1845424367
  8. ^ Public Goods and Public Choices
  9. ^ Taxpayers’ Choice Debt Reduction Act
  10. ^ Opt Out of Iraq War Act of 2007
  11. ^ Put Your Money Where Your Mouth Is Act
  12. ^ Kasperowicz, Pete, "Rep. Campbell proposes tax form change to encourage donations to the government". The Hill", 18 April 2011.

Further reading

  • Anderson, Lincoln – Velazquez: Funding war should be taxpayers’ choice The Villager. 2007
  • Baker, Russell – Taxpayers' Choice The New York Times. 1990
  • Binowski, Brittany – Why Mandatory Taxes Are Bad – And How The Government Should Fix Them (But Probably Won't). Forbes. 18 June 2012
  • Blinder, Alan S. – The Economics of Public Finance: Essays 1989
  • Brown et all, Giving to Government: Voluntary Taxation in the Lab
  • Buchanan, James M. – Public Finance in Democratic Process: Fiscal Institutions and Individual Choice 1967
  • Buchanan, James M. – The Economics of Earmarked Taxes 1963
  • Frey, Bruno & Torgler, Benno – Tax Morale and Conditional Cooperation
  • Indiviglio, Daniel. "What If Taxpayers Could Decide How Their Money Is Spent?". The Atlantic. Retrieved 18 April 2012. 
  • Jimerson, Jeff – Initiative helps boost taxpayers' 'choice' Walloa County Chieftain. 20 June 2012.
  • Kimball, Miles – No Tax Increase Without Recompense. 25 Aug 2012
  • Kuznicki, Jason. "How Responsible Are You for Where Your Taxes Go?". The League. Retrieved 18 April 2012. 
  • Lamberton, Cait Poynor – A Spoonful of Choice: How Allocation Increases Satisfaction with Tax Payments 2012
  • Le Grand, Julian - Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens 2003
  • Le Grand, Julian - The Other Invisible Hand: Delivering Public Services through Choice and Competition 2007
  • Listokin, Yair and Schizer, David – I Like to Pay Taxes: Lessons of Philanthropy for Tax and Spending Policy 2012
  • Maricano, Alain – Why markets do not fail. Buchanan on voluntary cooperation and externalities 2010
  • Ostrom, Vincent & Ostrom, Elinor – Public Goods and Public Choices
  • Paunic, Alida – Let's make the tax system more lovable
  • Wynn, L. S. "What is Personal Tax Earmarking?". wiseGEEK. Retrieved 19 April 2012. 
  • Yglesias, Matthew – Giving Taxpayers Choice Could Boost Satisfaction With Big Government And Boost Social Spending Think Progress. 19 April 2011
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