Taxpayer Apathy, Institutional Inertia, and Economic Growth*

Abstract

Abstract This paper analyzes the difference in taxpayers’s attitudes toward fiscal politics during the 1970s - early 1980s, a period dominated by «taxpayer revolt», and those observed in the late 1990s, when taxpayers show an apparent state of apathy. The answer is that taxpayers where unhappy in the late 1970s and early 1980s because their effective real incomes were being reduced in a period of stagnant growth with inflation. They remained quiescent in the last years because taxes are extracted from them during a period of real income growth and low inflation. Paradoxically, the economic reforms that the earlier tax revolt set off may have generated the real growth that has made die ultimate failure of the movement emerge.