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Sabet, Navid (May 2020): Turning Out for Redistribution: The Effect of Voter Turnout on Top Marginal Tax Rates. Discussion Papers in Economics 2020

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Abstract

I document the impact of voter turnout on top marginal tax rates in OECD countries between 1974 and 2013. I find that higher turnout leads to significantly higher rates of tax for top earners. This finding is 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 2013, and because the decrease is negatively correlated with income, the pivotal voter is no longer the one whose income lies at the median of the overall income distribution but instead the one whose income is at the median of a richer subset of it. An instrumental variables approach confirms my findings. Finally, I find a significantly negative relationship between turnout and top incomes shares, consistent with the fact that top earners are affected more by increases in top tax rates.

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