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This concluding chapter summarizes some of the key issues that have arisen in the book concerning taxation policies within the context of the development process. It then addresses some political economy considerations, noting that the book has emphasized the central role of constraints on the set of policies available to a government. Lastly, it discusses a central predicament facing all economists involved in policy analysis and comparisons – what assumptions should be made about government behaviour? Regarding the latter, the book takes the view that one of the determinants of the set of policies implemented in a country is the existing knowledge base that can be used for examining the consequences.

A general model (a reduced form formulation) for determining urban wages in less developed countries (LDCs) is presented, and, taking this into account, an analysis is made on the nature of urban–rural prices with an endogenous urban wage (i.e. the case in which sector-specific taxation policies are feasible), and of the price scissors (the price of industrial (urban) goods relative to that of agricultural (rural) goods) with endogenous wages (i.e. the case in which only economy-wide, rather than sector-specific, taxation policies are feasible). There is a brief discussion of whether an endogenous urban wage or a government-controlled urban wage is more appropriate for LDCs, and the former is favoured. There is also a note on fixing the urban wage in terms of the utility level. Lastly, a general formulation is presented of urban unemployment, and of tax-induced effects upon it.

Two pervasive features of most less developed countries (LDCs) are the presence of persistent urban unemployment and rural to urban migration, and these phenomena are important for an analysis of taxes and prices: any model that attempts to describe an LDC economy must at least be consistent with the presence of urban unemployment. Thus, the case is weak for an exclusive use of the neoclassical model (the form typically exposited in public finance textbooks in which all markets clear and in which there is no unemployment). Most models attempting to incorporate urban unemployment begin with the hypothesis that urban wages are higher than the market-clearing level, but they do not explain why wages are high and how wages are determined. Earlier chapters have described alternative mechanisms for determining urban wages and employment, and shown that taxation policies may well have an effect on these, and how this effect, in turn, affects the analysis of taxation policies. A further effect is that taxation policies may affect the nature of migration between the rural and the urban sectors, so a complete analysis of tax policy must take into account its induced effects on migration; these issues are addressed in this chapter.

A treatment of the wage–productivity hypothesis, which states that the wage a firm pays or the prices its workers face may have an important effect on the productivity of its workforce is presented. The hypothesis is first discussed at the level of the firm, and then analysed using a subclass of models to study how private firms might determine urban wages and unemployment, and how these decisions might be affected by tax and price policy.

This chapter discusses three main areas of policy: equal opportunity policy, taxation policy and original income and wealth policy. All three are needed in order to reduce the gap between rich and poor to more justifiable levels. The chapter also discusses what level of inequality the authors might aim to achieve given that they, like most members of the general public, accept that some degree of inequality is justifiable as a reward for hard work and effort. However, the chapter argues that, at present, those who have the highest levels of income and wealth have not necessarily achieved this through individual merit, and even if they had, the nature of the effort rewarded and the level of the rewards at the top cannot be justified on the grounds of relatively limited differences in effort or skill.

This chapter suggests a four-dimensional conception of substantive equality to evaluate the gendered impacts of taxation policies from a human rights perspective. The four-dimensional framework of substantive equality in relation to gender regards the right to equality as aiming to, first, redress disadvantage (the redistributive dimension); second, address stigma, stereotyping, prejudice, and hatred (the recognition dimension); third, facilitate participation and voice (the participative dimension); and, fourth, accommodate difference and transform gendered structures in society (the transformative dimension). This multidimensional conception of substantive equality functions as a valuable tool in evaluating taxation systems for their impact on gender. The chapter then looks at two particularly challenging aspects of taxation and gender: the role of care work, and the role of value-added tax (VAT) and other indirect taxes.

This chapter examines the relative utility of the strategic position and persuasion perspectives in explaining the potential of presidential leadership by focusing on several prominent issues arising since Barack Obama’s reelection. In discussions of presidential success, we want to know the contribution of persuasion and whether other factors offer more powerful explanations. For his failures, we want to investigate whether a dependency on persuasion contributed to them, whether aspects of his strategic position were critical to the outcome, and whether we can gain analytical leverage by asking if the president understood and effectively exploited his strategic position. The chapter considers issues that share some key aspects of the president’s opportunity structure, including taxation policy, sequestration, gun control, and government shutdown. It shows that the strategic position perspective leads us to ask different questions regarding presidential leadership—and encourages us to arrive at different, and better, answers.