Tax systems as (non-) participatory mechanisms

Abstract

The paper investigates the Brazilian and American income tax system to analyze how tax expenditures may act as a participatory mechanism in public budgeting. The literature on charitable deductions and tax expenditures suggests that tax systems may have a ballot nature, nonetheless few studies have addressed the issue. Thus, the paper aims to fill this theoretical gap by exploring how citizens may express their preferences to the government via tax deductions and by proposing a framework to compare the implications of each institutional design. Data showed that, yet differently, both tax systems allow a certain degree of participation and result in a substantial modification in how governments execute public policies and spend public resources. The comparison of the cases indicated that the same mechanism can be more or less participatory and those tax expenditures should be analyzed not only in terms of their financial results but also concerning their influence on democracy.