Public Choice 45:35-47 (1985). © 1985 Martinug Nijhoff Publishers, Dordrecht. Printed in the Netherlands. Tax systems and tax shares ARTHUR T. DENZAU ROBERTJ. MACKAY* 1. Introduction A fundamental theme in public choice analysis is to make explicit the 'bridge between tax and expenditure in the fiscal decision process' (Buchanan, 1967: Ch. 7). Given a tax system or institution, the choice of the tax rate (or other parameters of the tax system) implies a level of total spending and vice versa - in some real sense there can be only one in- dependent fiscal decision' (Buchanan, 1967: 87). The usual form of this bridge in public choice voting models seem simplistic when compared to the complex incidence analysis of neoclassical public finance. We propose to continue the merging of these two complementary forms of analysis.l In most public choice analysis which explicitly recognizes the bridge be- tween tax and expenditure, the concept of taxshare or taxprice is used. A taxshare is the cast share for each taxpayer of an increment to the public sector budget. If a dollar more is spent publicly, the taxshare is the addi- tional cost to each taxpayer. In its simplest form, a head tax could be used in a jurisdiction of 100 citizens. This would imply a taxshare of .01 for each individual. This simple form, assigning a constant cost share to each tax- payer, is the type of tax system most commonly used in public choice anal- yses. The taxprice is the cost of an additional unit of some publicly pro- vided good, and, in the case of constant marginal cost, is simply the tax- share multiplied by the unit price. 2 This simple taxshare system yields a vector of taxprices which can be used along with private commodity prices to analyze the voting choices of each citizen-taxpayer. * Associate Professor, Department of Economics, Washington University (St. Louis), and Professor, Department of Economics, .Virginia Polytechnic Institute and State University (Blacksburg, Virginia), respectively. We wish to acknowledge financial support from a grant from the National Science Foundation, NSF SOC 79-08561. Department of Economics, Washington University, 207 Eliot Hall, Campus Box 1208, St. Louis, MO 63130.