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Voting With Your Feet

1 min readBy: Gerald Prante

Don’t like taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. hikes in your neighborhood? You could just threaten to move like some residents of a Philadelphia suburb are doing following their city council’s decision to raise property and wage taxes on its citizens. From the Bucks County Courier Times:

Bristol Township residents could pay at least three separate tax increases next year – or they could move out of town.

Several residents announced plans to sell their homes as the township council unanimously hiked property, wage and occupational taxes Thursday night.

The average homeowner would pay about $71 more in property taxes next year. The property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. millage increase of 4.25 mills represents a 29 percent increase.

Together, the new money will help the township to tackle a $2 million deficit, hire 11 more police officers in 2006 and staff a new community center off Coates Avenue. (Full Story)

When a city or other government proposes a tax hike on its citizens, there are generally three ways in which the citizens can respond. The first is loyalty and to stick it out and pay the higher taxes. Another is to voice an opinion in opposition to the policy and hope others will voice their opinions in the hope of changing the policy. And most often for this voice option to be credible, it must include the threat of possibly choosing what is the third option — exit, where the citizens just pick up and move.

This three choice framework to explaining political, economic, and social behavior was established by Albert Hirschmann in his classic Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States.