Taxing Choices: International Competition, Domestic Institutions and the Transformation of Corporate Tax Policy

Since the 1980s, notable corporate tax base broadening and rate reductions have occurred throughout the rich democracies. Scholars agree that tax competition for mobile assets shapes this transformation. I address two questions in this article. First, what form has tax competition taken and, second, how have domestic institutions conditioned competition\u27s impact? I build on past work and argue that tax competition is characterized by the (Stackelberg) leadership of the United States as opposed to alternative forms of competition. At the same time, domestic institutions, especially the degree to which the nation is a co-ordinated versus liberal market economy, are central determinants of the pace of reform. I test these propositions with models of 1982–2008 tax rate change in 18 capitalist democracies. I find that rising trade openness and capital mobility place downward pressures on tax rates, the United States\u27 adoption of the neoliberal tax model engenders significant competitive responses from other nations, and that the institutions of co-ordinated economies slow the pace of neoliberal reforms. High public debt, left-leaning median voters and institutional veto points also significantly constrain tax policy change. I conclude with some reflections on tax policy in the wake of the global financial crisis and on neoliberalism and institutional change in advanced democratic capitalism

The Partisan Politics of New Social Risks in Advanced Postindustrial Democracies: Social Protection for Labor Market Outsiders

Advanced postindustrialization generates numerous challenges for the European social model. Central among these challenges is declining income, unstable employment, and inadequate training of semi- and unskilled workers. In this chapter, I assess the partisan basis of support for social policies that address the needs of these marginalized workers. I specifically consider the impacts of postindustrial cleavages among core constituencies of social democratic parties on the capacity of these parties to pursue inclusive social policies. I argue – and find support for in empirical analyses – that encompassing labor organization is the most important factor in strengthening the ability of left parties to build successful coalitions in support of outsider-friendly policies. I go beyond existing work on the topic by considering the full array of postindustrial cleavages facing left parties, by more fully elaborating why encompassing labor organization is crucial, and by considering a more complete set of measures of outsider policies than extant work. I compare my arguments and findings to important new work that stresses coalition building and partisan politics but minimizes the role of class organization

Activating Workers? The Political Economy of Active Social Policy in Postindustrial Democracies

Purpose – Since the mid-1980s, unemployment policy reforms in Europe and throughout the rich democracies have stressed publicly supported activation of the unemployed through both reductions in perceived disincentives to work as well as commitments for improved training, employment services, and related policies. In this chapter, I systematically explore the domestic and international political economic sources of these policy changes. Methodology/approach – I test a set of hypotheses – original and derivative – about the domestic and international determinants of labor market policy change through pooled time-series cross-section analysis of 1980-to-2002 annual data from 18 capitalist democracies. The dependent variables consist of national spending on active labor market policy, measures of passive unemployment compensation benefits, and the ratio of active to passive unemployment program spending. Causal models account for spatial diffusion of policy reforms as well as core political and economic determinants of policy change. Findings – I find that Left party governments and coordinated market institutions buoy resources for active labor market programs, maintain relatively generous passive unemployment supports and entitlements, and, at the same time, foster a shift to more active social policy. International trade openness promotes generous active labor market policies while more left-leaning voters and veto points within the polity significantly constrain reductions in unemployment benefits and entitlement rights. De-industrialization reinforces policy reforms toward activation while high unemployment rates engender cuts in passive unemployment benefits and eligibility conditions. Originality/value – Overall, the chapter demonstrates that the economic effects on policy change notwithstanding, politics fundamentally matters: domestic political dynamics and variations in institutions explain the preponderance of the change (or lack thereof) in unemployment policy

Do radical right populist parties matter? The case of the European welfare state

In this paper, we address three largely unanswered questions about the welfare state consequences of the significant rise in electoral support and government participation of radical rightwing populist (RRWP) parties in western Europe. First, does RRWP party success contribute to the maintenance or expansion of core social insurance programs? Second, do RRWP party electoral success and government cabinet portfolios lead to retrenchments of programs that disproportionately benefit immigrants and other “underserving” groups? Finally, do electorally successful and governing RRWP parties reshape the structure of the welfare state by diminishing universalism? Through extensive analysis of 1975-to-2015 data, we show that the answer to all three questions is yes. We also find support for our argument that the mechanism linking RRWP party success and welfare state outcomes rests with the competition between an ascendant radical populist right and social and Christian democratic parties for votes of core constituencies and how these mainstream parties strategically respond to RRWP party challenges. We conclude by discussing the implications for our findings for sociocultural polarization, political instability, and threats to democratic institutions

Globalization, institutions of social solidarity, and radical right-wing populism in Western Europe

We rejoin the question of whether globalization contributes to the electoral success of the radical populist right in Western Europe. We also advance and test the hypothesis that institutions of social solidarity directly weaken support for the radical right and moderate the electoral impact of globalization. In empirical analysis of national elections in 16 European polities from 1981 to 2015, we find that merchandise imports from developing nations, capital mobility, and, especially, inflows of refugees and asylum seekers are positively associated with the radical right-wing populist party vote. In addition, a universalistic welfare state directly depresses the vote for radical right-wing populist parties and conditions the linkages between immigration on the one hand, and electoral support for the radical populist right on the other. We also find that employment protection laws and encompassing, centralized union movements mitigate the positive effects of economic globalization and immigration on national vote shares of right-wing populist parties. In conclusion, we consider our findings’ implications for understanding the domestic political effects of globalization and sources of right-wing populism. We also reflect on the potentially significant, indirect effect of globalization on political instability that comes through international liberalization’s adverse impacts on institutions of social solidarity

The New Political Economy of Taxation in the Developing World

Concomitant with globalization, neoliberal tax reforms have spread across the globe since the early 1980s. In many countries, statutory rates, the number of tax brackets, and the incidence of tax allowances have been reduced for income taxes; in the developing world, international liberalization has also been associated with reduced revenues from trade taxes and increased pressures for expansion of the value added tax and income tax revenue intake. Yet, competition for mobile assets and new opportunities for tax avoidance potentially constrains taxation of corporate and personal income. Thus, contemporary conditions create especially severe challenges for the pursuit of greater income equality and enhanced public goods provision in developing nations. The present paper situates this special issue\u27s contributions within the theoretical and empirical literatures that seek to explain contemporary changes in taxation. I argue that we know quite a lot about the tax effects of globalization, domestic politics, and their interaction in rich democracies; we know much less about how international forces and domestic factors influence tax reforms in the developing world. In this context, I highlight how each paper in this volume contributes to our understanding of the impacts of globalization and domestic politics on tax policy choices and, in turn, the challenges and opportunities for revenue mobilization in developing nations