On Friedrich Hayek and Taxation

This study explores the implications of the work of the late economist Friedrich Hayek for taxation policy. Hayek's writings on the limits of rationality, the role of rules, and the limits of majority rule are examined. It is argued that Hayek's work here provides general support for broad-based nondiscriminatory tax policies but can be interpreted as cautioning against either radical or frequent changes in tax policy. His work also makes clear the importance of focusing on the institutional context of tax policy formulation. Hayek's approach is compared here with that of mainstream economists and that of James Buchanan.