Taxability, Protection, and the State
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Date
2004-11-19
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Publisher
Ohio State University. Mershon Center for International Security Studies
Abstract
The state,writes Douglass North, trades a group of services, which we shall call
protection and justice, for revenue. This paper explores the possibility that an
efficient trade may not be possible, while providing an explanation for variation in
the degree to which such protection is provided. At issue is the fact that the
revenues which in principle could justify the ex ante provision of protection are
typically collected ex post. Protection having been provided, firms may therefore
have an incentive to hide revenues from the state, while differing in their ability to
do so. Thus, the state will typically favor economic activity which is more taxable,a
proposition supported by data from a survey of firms in 25 postcommunist
countries. Perhaps surprisingly, such discrimination may exist even when a state
with commitment power can deter revenue hiding by promising to leave firms with
a share of their unhidden production.
Description
The University Archives has determined that this item is of continuing value to OSU's history.
The media can be accessed here: http://streaming.osu.edu/knowledgebank/mershon08/gehlbach.mp3
The media can be accessed here: http://streaming.osu.edu/knowledgebank/mershon08/gehlbach.mp3
Keywords
tax, protection, state