Taxing Choice: The Predatory Politics of Fiscal Discrimination

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Taxing Choice: The Predatory Politics of Fiscal Discrimination Edited by William F Shughart II Transaction Books 1997 . 411 pages $39.95 cloth; $19.95 paperback

As faith in big government programs has waned in the past two decades so has the ability of the government to raise revenues through income-tax increases. Until recently, deficit spending has been the route around the public's resistance, but the people have caught on to that deception. What are revenue hungry congressmen and bureaucrats to do? The answer: give taxation a greater purpose. Use it as the weapon of righteousness against the forces of evil. Make it taxation, not to raise revenue, but to ward off the devil. The tax of the 21st century is the sin tax or, more appropriately, the "choice tax."

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William Shughart, economics professor at the University of Mississippi, is a collection of essays that looks comprehensively at selective excise taxes through the lens of public choice theory, or what can be called the economics of interest-group politics. As Shughart points out, the argument for those taxes actually finds support in the economics literature. He writes in his introductory article, "The Economics of the Nanny State," that according to standard economic theory, an excise tax is justified when "the economic agents interacting in an unfettered market do not bear the full social costs . . . of their own decisions or choices. . . . [T]he consumption of certain products, such as alcohol and tobacco, imposes costs on society that the consumers do not themselves bear and which they consequently do not take into account when making decisions about how much to consume."

This quotation calls forth my one criticism of the book: it does not refute the theory of market failure and the case for social-cost taxes. In fact, the theoretical arguments against the theory are scarcely recognized by any of the authors.

The book is divided into four sections, each covering a different aspect of the issue. Section 1, "The Political Economy of Excise Taxation," features three articles examining the economic "justification" for excise taxes and presenting a historical look at the use of these taxes in the United States. …