When I think about the political economy of voting, I tend to think of arguments like those found in McCarty, Poole, and Rosenthal’s “Polarized America”:http://www.amazon.com/Polarized-America-Ideology-Walras-Pareto-Lectures/dp/0262633612/ref=sr_1_1?s=books&ie=UTF8&qid=1302706920&sr=1-1. Stripped down to its essence, the model (p.77) suggests that people with incomes above the mean income ought to prefer lower taxes; those with incomes below the mean income ought to prefer higher taxes. Or put another way, one’s preferred tax rate ought to decrease as income increases.
What, then, do we make of the following petition from a group calling themselves “Patriotic Millionaires for Fiscal Strength”:http://patrioticmillionaires.org/. They write:
bq. Dear Mr President
bq. We are writing to urge you to put our country ahead of politics.
bq. For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000.
bq. We make this request as loyal citizens who now or in the past earned an income of $1,000,000 per year or more.
bq. Our country faces a choice – we can pay our debts and build for the future, or we can shirk our financial responsibilities and cripple our nation’s potential.
bq. Our country has been good to us. It provided a foundation through which we could succeed. Now, we want to do our part to keep that foundation strong so that others can succeed as we have.
bq. Please do the right thing for our country. Raise our taxes.
How do we incorporate such actors into our models of political economy? Are these _Patriotic Millionaires_ simply an anomaly, not worthy of incorporation into models? I had a similar thought after voters in Washington State “voted down a referendum by an almost 2:1 margin”:http://vote.wa.gov/Elections/WEI/Results.aspx?RaceTypeCode=M&JurisdictionTypeID=-2&ElectionID=37&ViewMode=Results to establish an income tax only on those earning more than $200,000/year ($400,000/year for couples). That just shouldn’t happen in the McCarty, Poole, and Rosenthal world. Is it maybe time to start thing of tax rates as more of an ideological concern than as a matter of self-interest? Alternatively, the “Wall Street Journal”:http://blogs.wsj.com/wealth/2010/11/03/why-washingtons-tax-on-the-rich-failed/ suggested that the Washington State Referendum failed because voters saw it is a harbinger of a future income tax on everyone, which would still be acting in self interest, albeit a kind of far sighted one with a high value for future income. Note as well that I think this is a different perspective than the whole “What’s the Matter with Kansas”:http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.124.1296&rep=rep1&type=pdf debate, which argued that economic interests could get swamped by cultural issues.
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Note: In the original version of this post I mistakenly flipped “lower” and “higher” in the second sentence. Thanks to Alex Shalom for catching this.