Turning Out for Redistribution: The Effect of Voter Turnout on Top Marginal Tax Rates

Sabet, Navid (September 2016): Turning Out for Redistribution: The Effect of Voter Turnout on Top Marginal Tax Rates. Discussion Papers in Economics 2016-13

Abstract

This paper documents the impact of voter turnout on top marginal tax rates in the 34 OECD countries for the period between 1974 and 2014. Across a number of specifications, I find that increases in voter turnout have a positive and statistically significant effect on top tax rates. This finding is broadly consistent with the median voter theorem that posits government redistribution to be a function of the income of the median voter. Because turnout has fallen drastically in the decades leading to 2014, and because the decrease is strongly correlated with income, the pivotal voter is no longer the one whose income lies near the median of the overall income distribution but instead the one whose income is at the median of a much richer subset of the distribution. Using ordinary least squares estimation as well as panel data methods, I find that increases in turnout are associated with higher rates of income tax for top earners. An instrumental variables approach confirms my hypothesis, though the estimates are less precisely estimated.

• Item Type: Paper
• Keywords: voter turnout, income tax, redistribution, government policy
• Faculties: Economics > Munich Discussion Papers in Economics
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: H24, I38, P16
• Language: English

References

Abrial, Stephanie, Cautres, Bruno, & Mandran, Nadine. 2003 (March). Turnout and Absention at multi-level elections in France. Working Paper, Centre d’Informatisation des Donnees Socio-Politiques, Grenoble.

Acemoglu, Daron, & Robinson, James A. 2015. The Rise and Decline of General Laws of Capitalism. Journal of Economic Perspectives,29(1), 3–28.

Autor, David H. 2014. Skills, education and the rise of earnings inequality among the “other 99 percent”. Science,344(6186), 843–851.

Bohrer, Robert E., Pacek, Alexander C., & Benjamin, Radcliff. 2000. Electoral Partici- pation, Ideology and Part Politics in Post-Communist Europe. The Journal of Politics,62(4), 1161–1172.

Downs, Anthony. 1957. An Economic Theory of Democracy. New York: Harper Brothers. Franzese, Robert J. 2002. Macroeconomic Policies of Developed Democracies. Cambridge: Cambridge University Press.

Fujiwara, Thomas. 2015. Voting Technology, Political Responsiveness, and Infant Health: Evidence from Brazil. Econometrica,83(2), 423–464.

Gallego, Aina. 2010. Understanding Unequal Turnout: Education and Voting in Com- parative Perspective. Electoral Studies,29, 239–248.

Hacker, Jacob S., & Pierson, Paul. 2010. Winner-Take-All Politics: Public Policy, Political Organisation, and the Precipitous Rise of Top Incomes in the United States. Politics and Society,38(2), 152–204.

Harder, Joshua, & Krosnick, Jon A. 2008. Why Do People Vote? A Psychological Analysis of the Causes of Voter Turnout. Journal of Social Issues,64(3), 525–549.

Hicks, Alexander M., & Swank, Duane H. 1992. Politics, Institutions, and Welfare Spending in Industrialised Democracies, 1960-1982. American Political Science Review,86(3), 658–674.

Hindmor, Andrew. 2006. Rational Choice. Houndmills, Basingstoke: Palgrave Macmillan. Hoffman, Mitchell, Leon, Gianmarco, & Lombardi, Maria. 2015 (August). Compulsory Voting, Turnout and Government Spending: Evidence from Austria. Barcelona Graduate School of Economics Working Paper.

Hotelling, Harold. 1929. Stability in Competition. The Economic Journal,39(153),41–57.

Larcinese, Valentino. 2007. Voting over Redistribution and the Size of the Welfare State:The Role of Turnout. Political Studies,55, 568–585.

Lassen, David Dreyer. 2005. The Effect of Information on Voter Turnout: Evidence from a Natural Experiment. Americal Journal of Political Science,49(1), 103–118.

Leighley, Jan E., & Nagler, Jonathan. 1992. Socioeconomic Class Bias in Turnout, 1964- 1988: The Voters Remain the Same. American Political Science Review,86(3), 725–736.

Lindert, Peter H. 1996. What Limits Social Spending? Explorations in Economic History,33, 1–34.

Mahler, Vincent A., Jesuit, David K., & Paradowski, Piotr R. 2014. Electoral Turnout and State Redistribution: A Cross-National Study of 14 Developed Countries. Political Research Quarterly,67(2), 361–373.

Meltzer, Allan H., & Richard, Scott F. 1981. A Rational Theory of the Size of Govern- ment. The Journal of Political Economy,89(5), 914–927.

Oxfam. 2015. Wealth: Having it All and Wanting More. January. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Harvard University Press.

Piketty, Thomas, Saez, Emmanuel, & Stantcheva, Stefanie. 2011 (December). Taxing the 1%: Why the Top Tax Rate Could be Over 80%.

Quintelier, Ellen, Hooghe, Marc, & Marien, Sofie. 2011. The Effect of Compulsory Voting on Turnout Stratification Patterns: A Cross-National Analysis. International Political Science Review,32(4), 396–416.

Roberts, Kevin W.S. 1977. Voting over Income Tax Schedules. Journal of Public Eco- nomics,8(December), 329–340.

Romer, Thomas. 1975. Individual Welfare, Majority Voting and the Properties of a Liinear Income Tax. Journal of Public Economics,4(2), 163–185.

Seki, Katsunori, & Williams, Laron K. 2014. Updating the Party Government Data Set. Electoral Studies,34,270–279.

Smets, Kaat, & van Ham, Carolien. 2013. The Embarrassment of Riches? A Meta- Analysis of Individual-Level Research on Voter Turnout. Electoral Studies,32, 344–359.

Stefano DellaVigna, John A. List, Ulrike Malmendier Gautam Rao. 2014. Voting to Tell Others. NBER Working Paper.

Winters, Jeffrey A. 2011. Oligarchy. Cambridge: Cambridge University Press