Fiscal Powers Revisited

Abstract

This chapter restates the basic logic of constitutional restrictions on the government’s power to tax. It then examines an important proviso to that basic logic—namely, that if, as seems plausible, regulations are a substitute for fiscal measures as a mechanism for pursuing government objectives, then restrictions on the power to tax may give rise to worse interventions than taxes represent. Moreover, the discipline on foolish regulations seems likely to be more effective the higher the aggregate tax take.