unleashing leviathan: public goods under involuntary taxation
DESCRIPTION
UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION. Johnnie B. Linn III Concord University Athens, WV 24712. This Model. Many competing firms, each in its own arena, facing “outliers” who use force only. Ratio Rule Government enters arenas. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/1.jpg)
UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY
TAXATION
Johnnie B. Linn IIIConcord UniversityAthens, WV 24712
![Page 2: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/2.jpg)
This Model
• Many competing firms, each in its own arena, facing “outliers” who use force only.
• Ratio Rule• Government enters arenas.• Government is viable if individuals are better
off with government than in anarchistic arenas.
![Page 3: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/3.jpg)
Outliers
• Outliers are force-using individuals who do not act collectively on the margin (they are like an open-access fishery).
• In short run, number of outliers is an environmental variable, like a price.
• In long run, per-capita winnings of outliers is comparable to the wage they would have earned if employed as workers or guards.
![Page 4: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/4.jpg)
Government
• Tax collectors receive residual they extract from firms beyond amount they are required to forward to government.
• Tax collectors act on the margin at the direction of government.
• Government force is a public good.• Individuals have recourse to government force
in private disputes; and government against firms, but not firms against government.
![Page 5: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/5.jpg)
The Force Ratio Rule
(1)
![Page 6: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/6.jpg)
Input Elasticities
(4)
(5)
![Page 7: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/7.jpg)
Government Force Input Elasticity
(6)
![Page 8: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/8.jpg)
Tax on Outlier Income
• Tax is defined on range [0, ]
(7)
![Page 9: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/9.jpg)
Competitive Equilibrium
(13)
![Page 10: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/10.jpg)
Range of Share-of-Winnings Function
0 1
I II III
0 1
1
![Page 11: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/11.jpg)
Range of the Competitive Equilibrium
0
1
1
Q
![Page 12: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/12.jpg)
Outliers’ Share of Income
(14)
![Page 13: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/13.jpg)
Tax on Firm Income
(7’)
![Page 14: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/14.jpg)
Competitive Equilibrium
(13’)
(14’)
![Page 15: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/15.jpg)
Firm’s First-Order Conditions
(8’)
(9’’)
![Page 16: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/16.jpg)
Estimators of Firm Parameters
(17)
(18)
![Page 17: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/17.jpg)
Government Budget Condition
(15)
![Page 18: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/18.jpg)
Use of the Surplus
Public GoodTax Collectors
TB
TC
Surplus
Gross Winnings
Non-Public-Goods Outlays
![Page 19: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/19.jpg)
Government Winnings under Exponential Force Function
(19)
![Page 20: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/20.jpg)
Estimator of Government Parameters
(16)
![Page 21: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/21.jpg)
Government Superior to Anarchy
(21)
![Page 22: UNLEASHING LEVIATHAN: PUBLIC GOODS UNDER INVOLUNTARY TAXATION](https://reader035.vdocument.in/reader035/viewer/2022062717/56812b28550346895d8f333e/html5/thumbnails/22.jpg)
Results
CATEGORY SOURCE 2002 2008 DESIGNATORAfter-Taxes Tax Rate OECD 0.36 0.37 t
Tax Collector IncomeOES Sector 99 (13-2081)
$3.2 billion $3.5 billion wT
Tax CollectorsOES Sector 99 (13-2081)
69,320 66,030 T
Law Enforcement IncomeOES Sector 99 (33-0000)
$73.4 billion $91.1 billion
Non-Public-Good Gov’t Worker Income
OES Sector 99 (00-0000 less 33-0000)
$340.70 billion $378.3 billion wT0
Non-Public-Good Gov’t Capital Outlay
U.S. Census Bureau
$96.1 billion* $105.9 billion* wK0
Outlier Income FBI $17.1 billion $17.8 billion wUGuard Income OES 33-9032 $20.6 billion $27.0 billion wGGuards OES 33-9032 977,650 1,046,070 GGov’t Surplus Multiplier 3.31 3.99 bTax Collector Advantage 6.43 8.83 c
Worker IncomeOES 00-0000 (less sector 99) less OES 33-9032
$4045.2 billion $5,204.4 billion wL
Statistic for 196.37 192.76
Statistic for 1.20 1.52
Threshold before-tax rate for government viability
0.108 0.093
*Inferred from ratio of capital outlays to employee compensation in 1992.