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65 U. Chi. L. Rev. 387 (1998)
Taxes and Ballots

handle is hein.journals/uclr65 and id is 397 raw text is: The University of Chicago
Law Review
Volume 65                         Spring 1998                         Number 2
@ 1998 by The University of Chicago
Taxes as Ballots
Saul Levmoret
We are familiar with two kinds of taxes: those that raise reve-
nue and those that aim to induce behavior of one kind or another.1
But the tax system also can be used to gauge preferences in a way
that substitutes for, or even improves upon, a function normally per-
formed by the ballot box or by privately organized surveys. An ex-
ample of this taxes as ballots idea is the annual American inquiry
in the form of a checkoff on tax returns, permitting individual tax-
payers to earmark a small amount of their tax payment for the
t Brokaw Professor and Albert Clark Tate, Jr. Research Professor, University of Virginia
School of Law. I am grateful for suggestions received from David Bradford, Clay Gillette, Louis
Kaplow, Kyle Logue, George Triantis, and participants at workshops at New York University,
the University of Virginia, the Harvard Conference on Research in Taxation, and the Univer-
sity of Michigan.
1 Neutral taxes are those that do the first alone. Revenue-neutral inducements would
do the second alone, but such taxes would be difficult to design, and little attention has been
paid to their desirability. In practice, many taxes either intentionally or inadvertently incorpo-
rate both revenue-raising and behavior-affecting features. And if we view the first kind of tax
as revenue-affecting, rather than revenue-raising, then most taxes combine these two as-
pects. Thus, an excise tax on cigarettes is likely both to raise revenue and to reduce consump-
tion and production of that product. An income tax exclusion or deduction for health care ex-
penditures or for the cost of health insurance is likely not only to yield less revenue than a
system without such features but also to generate more expenditures on health care and on
the deductible (or favored) forms of insurance. As will become clear, I intend to avoid anything
controversial in these characterizations, for my goal is to focus on a different role for taxes.
Some readers will insist that the preference-revealing role of taxes that I explore in this Article
may be characterized as behavior-inducing. In some sense, everything associated with the
tax system (including working or investing in a way that produces revenue for the government)
may be labeled as behavior affected by the various rules of the system.

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