Tax instruments as constraints on the disposition of public revenues

This paper examines the possible selection of tax instruments as means of inducing a Leviathan-like government to provide the public goods and services that taxpayer-beneficiaries desire. The analysis is conducted in a constitutional setting, in which potential taxpayers-beneficiaries confront choices among tax instruments, when these are taken to be the primary constraints on the behavior of government in postconstitutional periods. The analysis suggests a particular form of earmarking; each expenditure is allotted a particular tax base that is highly complementary with the public good itself. The complementarity between tax base and the corresponding public good is the central relationship that exerts discipline on government. Arguments for this type of earmarking have not, to our knowledge, been previously developed in tax theory.