The Fiscal Contract: States, Taxes, and Public Services

2005/07/01 by Jeffrey F. Timmons · 71 citations
Economics, Econometrics and Finance · Social Sciences · #Autonomy #Business #Economics #Fiscal Policy and Economic Growth #Fiscal policy #Law #Local Government Finance and Decentralization #Microeconomics #Monetary economics #Political science #Property rights #Public economics #State (computer science) #State income tax #Tax deferral #Tax reform

paper · open access · doi:10.1353/wp.2006.0015

published in World Politics 57(4), 530-567 (Cambridge University Press)

openalex publication_date 2005/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01

Abstract

Using data from approximately ninety countries, the author shows that the more a state taxes the rich as a percentage of GDP, the more it protects property rights; and the more it taxes the poor, the more it provides basic public services. There is no evidence that states gouge the rich to benefit the poor or vice versa, contrary to state-capture theories. Nor is there any evidence that taxes and spending are unrelated, contrary to state-autonomy models. Instead, states operate much like fiscal contracts, with groups getting what they pay for.

Citations

• Generalized Estimating Equation Models for Correlated Data: A Review with Applications
• Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations
• What To Do (and Not to Do) with Time-Series Cross-Section Data

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