TY  - JOUR
AU  - Becker,Gary S.
AU  - Mulligan,Casey B.
TI  - Deadweight Costs and the Size of Government
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6789
PY  - 1998
Y2  - November 1998
UR  - http://www.nber.org/papers/w6789
L1  - http://www.nber.org/papers/w6789.pdf
N1  - Author contact info:
Gary Becker
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL   60637
Tel: 312/702-8254
E-Mail: gbecker@uchicago.edu

Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
M2  - featured in NBER digest on 1999-02-01
AB  - We provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare and show that tax system or spending program which is suboptimal from a Ramsey point of view can improve taxpayer welfare because the system creates additional political pressure for suppressing the growth of government.  Relevant examples include the use of inflation taxes capital taxes, excise taxes, deficit financing, and income taxes with many We also demonstrate the similarity of the political responses to revenue shocks, spending shocks, changes in program efficiency. In a broad sample of countries for the years 1973 - 90, we show that broad-based taxes with fairly flat rate structures -- are associated with larger governments.  An analysis of defense spending -- especially wartime spending -- oil shocks, intergovernmental grants, and other flypaper effects suggests that the cause and effect is not from spending to tax structures.
ER  -