The foundation of this book derives from two sources. Like most writers concerned with public finance, we rely on traditional microeconomics and general equilibrium analysis to describe the economic decisions of individuals in the private sector. To this, we link formal modeling of collective choice behavior, relying in particular on recent advances in the theory of probabilistic voting. The book examines taxation as it arises on this joint foundation – as a result of the interaction of maximizing decisions in the private and public sectors.

Although the final form of the book reflects our special interests and concerns, we have attempted to present a balanced picture, one that is more comprehensive than commonly found in the literature on taxation that includes elements of collective choice. We examine taxation and tax systems in democratic countries from a positive or predictive point of view, but we also devote considerable space to discussion of efficiency and of normative concerns. In addition, we use applied general equilibrium analysis and statistical research to link theory to empirical data. We feel that taxation as it arises out of democratic choices can best be understood if examined from all these perspectives in relation to an expanded theoretical foundation that incorporates collective choice.

Although the book was written over the past four years, the material reported in several of the chapters evolved over a longer period.