Tax choice

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In public choice theory, tax choice (sometimes called taxpayer sovereignty[1] or earmarking[2][not in citation given]) is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of consumer choice to public finance. They claim taxpayers react positively when they are allowed to allocate portions of their taxes to specific spending.[3][4][5]


Daniel J. Brown[6] examines tax-target plans in educational programs.

Alan Peacock, in his 1961 book The Welfare Society,[page needed] advocates greater diversity in public services (education, housing, hospitals).[clarification needed]

Optimal quantities of public goods[edit]

According to Vincent and Elinor Ostrom, it is possible that government may oversupply, and a market arrangement may undersupply, those public goods for which exclusion is not feasible.[7][8]

Foot voting versus tax choice[edit]

Voting with your feet and voting with your taxes are two methods that allow taxpayers to reveal their preferences for public policies. Foot voting refers to where people move to areas that offer a more attractive bundle of public policies. In theory foot voting would force local governments to compete for taxpayers. Tax choice, on the other hand, would allow taxpayers to indicate their preferences with their individual taxes.

In the Tiebout model, for example, there is costless mobility; individuals seek out a jurisdiction that provides exactly the level of output of the public good that they wish to consume. In so doing, they reveal their preferences for "local" public outputs and generate a Pareto-efficient outcome in the public sector. – Wallace E. Oates, On the Theory and Practice of Fiscal Decentralization

Legislative measures[edit]

Four bills involving tax choice have been introduced by the United States Congress since 1971. The Presidential Election Campaign Fund, enacted in 1971, allows taxpayers to allocate $3 of their taxes to presidential election campaigns. The 2000 Taxpayers’ Choice Debt Reduction Act would have allowed taxpayers to designate money toward reduction of the national debt.[9] The 2007 Opt Out of Iraq War Act would have allowed taxpayers to designate money toward certain social programs.[10] The 2011 Put Your Money Where Your Mouth Is Act would have allowed taxpayers to make voluntary contributions (not tax payments) to the government.[11][12] These later bills died in committee.

In Popular Culture[edit]

See also[edit]


  1. ^ Brown, Daniel J. (Fall 1979). "The Case for Tax-Target Plans". Journal of Education Finance. University of Illinois Press. 5 (2): 215. Retrieved January 26, 2013. For educators, these "new" values reflect a demand for taxpayer sovereignty, greater choice among educational programs, and more responsiveness on the part of educational systems. 
  2. ^ The Economics of Earmarked Taxes(subscription required)
  3. ^ Democracy Journal
  4. ^ Do Earmarks Increase Giving to Government?
  5. ^ Science Direct
  6. ^ The Case For Tax-Target Plans
  7. ^ Kennett, Patricia (2008). Governance, globalization and public policy. Edward Elgar Publishing. p. 56. ISBN 978-1845424367
  8. ^ Public Goods and Public Choices
  9. ^ Taxpayers’ Choice Debt Reduction Act
  10. ^ Opt Out of Iraq War Act of 2007
  11. ^ Put Your Money Where Your Mouth Is Act
  12. ^ Kasperowicz, Pete, "Rep. Campbell proposes tax form change to encourage donations to the government". The Hill", 18 April 2011.
  13. ^ Ellen DeGeneres, Mario Lopez (4 May 2016). What Ellen DeGeneres Would Do If She Were President. Extra. Archived from the original on 10 May 2016. 

Further reading[edit]