Book review: taxing the rich: a history of fiscal fairness in the United States and Europe by Kenneth Scheve and David Stasavage

In Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, authors Kenneth Scheve and David Stasavage seek to expand our historical appreciation of the political economy of taxation and, more specifically, the taxation of the wealthiest in society. Christopher May does not hesitate in recommending this accessible and clearly argued book to those looking to better understand current debates surrounding taxation

The rise of modern taxation:A new comprehensive dataset of tax introductions worldwide

This article describes the new Tax Introduction Dataset (TID). Listing the year and the mode of the first permanent introduction of six major taxes (inheritance tax, personal income tax, corporate income tax, social security contributions, general sales tax and value added tax) in 220 countries, 1750–2018, TID is the most comprehensive dataset of its kind. The comprehensiveness of our measure is of critical value to empirical work on the causes of tax innovation and its consequences for state, society and economy. In this paper, we explain the selection of our tax sample and the structure of the dataset, descriptively map temporal and regional patterns of tax introductions around the world, and draw on TID to investigate associations between tax introductions and economic development, war, and democratization.</p

Income Inequality in America: Conclusions from 100 years of income tax data and cross-country comparisons

In 1913, taxation of income was permanently introduced in the United States. Other similarly developed countries soon followed suit. From there, income inequality in the United States dropped significantly, and the decline in Europe was even more dramatic. First, this paper considers the changes over time of the share of national income gained by the top 1% of income earners in seven countries going back to World War Two. A second analysis considers the impact that tax policy may have had on the share of income accruing to the top 1% of U.S. income earners between 1980 and 2014, a period that begins just before the largest tax cut in US history and saw major increases in income inequality in the US. The first analysis shows that income inequality began to rise in some countries in the last two decades of the twentieth century, notably the United States, United Kingdom and Australia. However, this wasn’t the case in other countries, including France, Japan and the Netherlands. We also look at Norway, which has experienced a more unique path. The second analysis shows mixed findings for the impact of income tax policy and its progressivity on income inequality in the U.S. from 1980 and 2014

The Ideology of Heads of Government, 1870-2012

This Note introduces the Heads of Government dataset, which provides summary information about the ideological orientation of heads of government (left, center, or right, with separately provided information about religious orientation) in 33 states in Western Europe, the Americas, and the Asia–Pacific region between 1870 and 2012. The Note also describes some intriguing empirical patterns when it comes to over-time changes in the political prominence of left-wing, centrist, and right-wing parties

MODERNIZATION OF THE FISCAL SYSTEM: SOME REMARKS ON THE INTRODUCTION OF CAPITAL AND WAR WEALTH LEVIES IN SELECTED COUNTRIES FROM WESTERN AND CENTRAL EUROPE

This article aims to show that extraordinary taxes, introduced after WWI, performed better in Central and Eastern European (CEE) countries than in Western countries, even though they were originally a Western idea. The research reveals that these taxes generated some revenue, but their main function was to show that governments were trying to tackle the unfairness that had resulted from years of running a war economy. It is doubtful that these taxes are useful components of fiscal systems, as they are something of a paradox. They create more injustice (Adam Smith’s principles of taxation were partially broken when these taxes were applied), although they should theoretically reduce the inequalities caused by war

Trade and redistribution: trade politics and the origins of progressive taxation

What explains variation in tax progressivity before World War I? I argue that trade politics shaped the emergence of progressive taxation. If labor could provide a useful ally, trade policy coalitions meant compromise on redistributive demands: progressive taxes, especially where inequality was lower. In time-series cross-sectional analysis, I find that trade interest proximity between labor and elites was associated with more progressive taxation in ten European countries between 1870 and 1913 under conditions of low inequality. The coalition and compromise mechanism is evident in subnational evidence from Britain. Where constituency interests favored free trade, Liberal-Labour electoral alliance was more likely in 1906, and the local MP was more likely to support the 1909 ‘People’s Budget’ for progressive taxation

Was Nazi Germany an “Accommodating Dictatorship”? A Comparative Perspective on Taxation of the Rich in World War II

Götz Aly's book Hitler's Beneficiaries considers the Nazi regime an “accommodating dictatorship.” According to Aly, the majority of the population benefited from the Nazis’ war. He sums up Nazi tax policy under the headings “Tax Breaks for the Masses” and “Tax Rigor for the Bourgeoisie.” This perspective represented progress in that, until then, tax policy had not featured in any of the major historical overviews of National Socialism. For a more in-depth assessment of Nazi tax policy, however, it must be compared against the tax policies of Germany's wartime enemies. I compare tax policies in Germany, Britain, and the United States and show that Aly's theories do not hold. They are neither consistent with the declared intentions of those who imposed these policies nor with the results as reflected in the relevant statistics

Who Pays for War? Economic Inequality, Financial Strategies, and War

This dissertation explores the critical importance of domestic economic inequality, an understudied factor, in the choices states make to finance war. It asks how states choose among the five major financing instruments during wartime: (1) taxation, (2) reduction in non-military spending, (3) domestic borrowing, (4) foreign borrowing, and (5) money creation. I develop a theory, which I term a “redistributionist theory of war finance,” to explain the variation in how modern states finance war. I argue that the choice of war finance is made through triangular strategic interactions among three sets of domestic actors: the leadership, the wealthy elite, and the public, the rest of a state’s population. I also argue that each war finance strategy is associated with specific redistributive consequences that create a cleavage between the wealthy elite and public. The redistributive consequences of war finance, and the risk of social instability, vary with the level of domestic economic inequality. Therefore, different levels of inequality (low, high, extremely high) shape state choices of war finance by affecting fiscal bargaining between the political leadership and societal actors during wartime. Domestic economic inequality affects the choice of war finance strategy by influencing a political leadership’s ability to achieve a successful fiscal bargain within society. When inequality is low, the public’s dependence on social programs is relatively mild, as is their demand for redistribution. On the other hand, the wealthy elites’ expected tax burdens are also moderate. As a result, the political leadership is more likely to secure a consensus of “equality of fiscal sacrifice” without causing serious instability. Specifically, leaders can more successfully enact progressive taxation and reduce nonmilitary spending to pay for war. Conversely, when inequality is high, the redistributive conflict between competing coalitions is likely to be more serious. Unable to strike a bargain of fiscal sacrifices without severe social instability, the leadership is expected to rationally delay redistributive conflict by resorting to borrowing. A deficit-financing strategy enables leaders to defuse public discord while appeasing the wealthy elite with potential investment opportunities and lower tax burdens. Especially when domestic economic inequality reaches the highest level, leaders will have incentives to rely primarily on foreign borrowing to finance war efforts. Finally, because money creation is associated with two different redistributive effects, I expect there to be a U-shaped relationship between domestic economic inequality and the choice of money creation. A state is more likely to include monetary creation in its war finance portfolio if the income distribution of the state is either equal or highly unequal. To examine my theory, I utilize a mixed-method research design with both quantitative and qualitative methods. First, I conduct a quantitative analysis of state war finance from 1950-2007. Second, I present two sets of comparative case-studies: (1) United States war finance in the Korean and Vietnam Wars; and (2) the Chinese and Japanese financing of the second Sino-Japanese War from 1937-1945. The findings support my theory. In showcasing the relationship between economic inequality and war finance, my dissertation identifies a novel mechanism in how inequality affects the distribution of financial burdens of war. It also contributes to the understanding of fiscal, financial, and monetary policy choices in the exigencies of war