INTERTEMPORAL COMMITMENT PROBLEMS AND VOTING ON REDISTRIBUTIVE TAXATION

A rich person who fears a loss of income may later favor redistributiv e taxation and a mix of taxes and public goods that differs from the o ne he now favors. If mobility is costly, and if government in each per iod uses majority voting to determine policy, then this person may pre fer to live in a community that is permanently ruled by poor residents . Majority voting is a mechanism that can overcome intertemporal commi tment problems of income insurance. (C) 1994 Academic Press, Inc.