Front Page Titles (by Subject) 5.5.: The Time Preference of the Taxpayer-Citizen with Respect to Public Spending - The Collected Works of James M. Buchanan, Vol. 9 (The Power to Tax: Analytical Foundations of a Fiscal Constitution)
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5.5.: The Time Preference of the Taxpayer-Citizen with Respect to Public Spending - James M. Buchanan, The Collected Works of James M. Buchanan, Vol. 9 (The Power to Tax: Analytical Foundations of a Fiscal Constitution) 
The Collected Works of James M. Buchanan, Vol. 9 The Power to Tax: Analytical Foundations of a Fiscal Constitution, Foreword by Geoffrey Brennan (Indianapolis: Liberty Fund, 2000).
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Foreword and coauthor note © 2000 Liberty Fund, Inc. © 1980 Cambridge University Press.
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The Time Preference of the Taxpayer-Citizen with Respect to Public Spending
We have already taken account of the taxpayer’s time preferences as he adjusts between present and future consumption in the face of alternative tax arrangements. We noted that such adjustments will affect the time pattern of governmental revenue collections. Time preference will enter into the citizen’s constitutional calculus in another and different fashion when he recognizes the relationship between the time pattern of revenue receipts and the time pattern of the public spending that those revenues facilitate. Throughout the analysis, we have continued to assume that a proportion of the revenue collected by Leviathan (designated by α in the initial model in Chapter 3) must be expended on public goods. Therefore, the timing of public-goods expenditure will reflect the timing of revenue receipts. Recognizing this relationship, the individual taxpayer-citizen at the constitutional stage may prefer to allocate to Leviathan greater taxing powers than otherwise might be the case, if by doing so a preferred time stream of public-goods benefits can somehow be ensured.
For the purpose of isolating the relevant dimensions of taxpayer choice in this regard, we may reconstruct Table 5.1 to include the taxpayer’s consumption of public and private goods in each of the two periods of the simplified model. The results are shown in Table 5.2.
If we assume that all public goods generate consumption benefits in the same period in which they are provided, one attribute of Table 5.2 warrants particular notice. The consumption-expenditure tax allocates public expenditures over the two periods in precisely the same proportion as the individual allocates his private expenditures. Of course, the desired intertemporal pattern of public-goods consumption may differ from the desired pattern for private goods. But there should at least be some presumption that the two desired temporal patterns will tend to be roughly the same. If this presumption is accepted, an a priori case for consumption taxation is established, by comparison with the alternatives set out in Table 5.2.
As previously noted, the striking intertemporal patterns of revenues associated with the income and labor income taxes is partly imposed by the simplifying assumptions of our two-period model. As we extend the analysis to many periods, and to many taxpayers, and allow labor income to be earned
in all periods, the intertemporal lumpiness of income-tax revenues disappears. Nevertheless, to the extent that the time pattern of aggregate income and aggregate consumption diverge, there does seem to be something to be said for the consumption base along the lines indicated in the analysis.
If public goods are assumed to be durable, so that they generate benefits over both periods, there may be some preference for expenditure earlier rather than later. In order to obtain the appropriate time stream of benefits, the taxpayer may prefer larger revenues in earlier periods. There does not, however, seem to be any a priori reason for believing that public consumption goods are more durable than private goods.