Taxation under Direct Democracy

Arbeitspapier

Do citizens legislate different tax policies than parliaments? We provide quasi-experimental evidence for causal effects of direct democracy. Town meetings (popular assemblies) replace local councils in small German municipalities below a specific population threshold. Difference-in-differences, RD and event study estimates consistently show that direct democracy comes with sizable but selective tax cuts. Property tax rates, which apply to all residents, decrease by some 10 to 15% under direct democracy. We do not find that business tax rates change. Direct democracy allows citizens to design tax policies more individually than voting for a high-tax or low-tax party in elections.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9166

Classification and Topics

• Classification: Wirtschaft ; Social Choice; Clubs; Committees; Associations ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; State and Local Taxation, Subsidies, and Revenue ; Finance in Urban and Rural Economies
• Subject: direct democracy ; town meeting ; popular assembly ; constitution ; public finance ; taxation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Geschwind, Stephan ; Roesel, Felix
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/236708
• Last update: 10.03.2025, 11:43 AM CET