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Overview

Last week we looked at the politics of spending. This week we will explore the other side of the equation: the politics of taxing. The politics of taxation in the context of public budgeting often reveals itself in two kinds of controversies: 1) controversies over the raising of taxes and 2) controversies over the cutting of taxes. As you can imagine, different factions of each side of these debates seek to shape the opinions of voters and place pressure on elected officials by framing these issues in very different ways. This creates a complex and nuanced political dynamic for political leaders who may be held accountable for both government benefits promised in a campaign and limitations and the promises of limitations on new taxes that could be necessary to pay for promised benefits. In this classic ‘have your cake and eat it too’ scenario, politicians may employ a variety of strategies such as deficit spending or indirect taxation (e.g., taxing businesses and allowing them to pass those costs on to their customers in the form of higher prices) in order to increase spending while avoiding the political ramifications of raising taxes.