Voting With Your Feet

December 30, 2005

Don’t like tax 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 tax 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.

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