TY - JOUR
T1 - Regulation and revenue
AU - Brennan, Geoffrey
AU - Kliemt, Hartmut
PY - 2008/9
Y1 - 2008/9
N2 - The power to tax and the power to regulate are often analyzed separately. We argue that, when in the hands of a single authority, the power to tax may act as a check on the power to regulate, thereby discouraging regulations that adversely affect GDP, and promoting regulations that enhance GDP. This effect will be stronger the higher are (marginal) taxes. This argument is used both to suggest an explanation for the observed positive correlation between high taxes and economic freedom, and to warn against the granting of regulatory but not fiscal powers at the European level.
AB - The power to tax and the power to regulate are often analyzed separately. We argue that, when in the hands of a single authority, the power to tax may act as a check on the power to regulate, thereby discouraging regulations that adversely affect GDP, and promoting regulations that enhance GDP. This effect will be stronger the higher are (marginal) taxes. This argument is used both to suggest an explanation for the observed positive correlation between high taxes and economic freedom, and to warn against the granting of regulatory but not fiscal powers at the European level.
KW - Constitutional design
KW - Regulation
KW - Taxation
UR - http://www.scopus.com/inward/record.url?scp=52249108483&partnerID=8YFLogxK
U2 - 10.1007/s10602-008-9054-4
DO - 10.1007/s10602-008-9054-4
M3 - Article
SN - 1043-4062
VL - 19
SP - 249
EP - 260
JO - Constitutional Political Economy
JF - Constitutional Political Economy
IS - 3
ER -