Search

Constituting a central historical link between war and long-term fiscal capacity, war taxes are generally perceived to be a thing of the past. This article corrects the picture by presenting new, global data on war taxes, 68 in total, introduced between 1960 and 2020. Far from having been abandoned, war taxes have remained a crucial war-time fiscal instrument, leaving long-term imprints on tax systems across the contemporary world. Serving the twin imperatives of revenue maximisation and generation of taxpayer consent, I argue that the use of war taxes is conditioned by the relative intensity and the perceived legitimacy of a war, be it civil or inter-state. The proposed logic aligns with case evidence, further supported by macro-quantitative analysis. The results speak to the large literature on war and state-building, challenge the standard disintegrative view of civil wars, and provide new empirical insights into the political economy of conflict-affected countries. [ABSTRACT FROM AUTHOR]

The purpose of this study was to explore the receptiveness of Croatian local governmental officials in adopting a council-manager reform model of governance, given the low administrative and fiscal capacities of many Croatian cities. We surveyed all 128 cities in Croatia with a response rate of 48% (n = 61). Sixty-two percent of top administrators were skeptical that this reform model was feasible. Our data suggest a desire of city administrators for shielding administrative functions from political ones as half of all respondents felt political pressure in budgeting and personnel issues. This was amplified through the qualitative data where respondents cited political parties' control in city administration and interference in administrative functions. Chief obstacles to implementing reform components focused on concerns about the political influence of politicians. [ABSTRACT FROM AUTHOR]

How do political parties shape state capacity? We argue that democratic leaders backed by personalist parties are more likely than other leaders to undermine impartial state administration. Personalist parties are those where the leader has more control over the party than other senior party elites. Elites in these parties have careers closely tied to the leader, are unlikely to normatively value an impersonal bureaucracy, and lack collective action capacity independent from the leader. Therefore, personalist parties are less likely than other parties to restrain leaders from undermining impartial state administration. Results from various designs for causal inference show that party personalism decreases impersonal state administration, particularly when the party controls a legislative majority. However, party personalism does not influence other dimensions of state capacity, such as fiscal capacity or territorial control. The findings have implications for how political parties enable democratically elected leaders to erode open-access societies and ultimately, democracy. [ABSTRACT FROM AUTHOR]

Do ethnic majorities and minorities have diverging preferences for fiscal capacity? Do these preferences converge during national emergencies such as interstate war? In this paper, we provide evidence from a natural experiment to demonstrate that politically salient minority-majority divisions undermine the development of fiscal capacity. In addition, we show that the pressure of interstate war is insufficient to supersede differences in support for the expansion of state's capacity for taxation between majority and minority groups. More specifically, we employ a regression discontinuity design using a natural border that separates linguistic groups and municipality outcomes of a popular vote on the introduction of direct taxation at federal level in Switzerland during the First World War. The findings suggest that salient minority-majority divisions have a negative effect on the expansion of states' capacity for taxation even during periods of interstate war. [ABSTRACT FROM AUTHOR]

Calls against austerity have entered the political agenda of very different actors in the political spectrum – from social democratic to right-wing populist parties. In this article, we argue that the main failures in realizing these claims and thus overcoming austerity can hardly be explained only in terms of (lacking) political will. We rather approach this problem complex in the two emblematic cases of Italy and Spain by foregrounding the disciplinary effects of capital accumulation in both the countries through a long-term historical reconstruction of the fiscal and steering capacity of their respective state institutions. Despite key specificities in the respective fragile accumulation regimes, the main findings point to the fact that the structure of accumulation has imposed strong constraints in both Italy and Spain. An unstable and crisis-prone capital accumulation characterized by low productivity, a lack of sectoral diversity, regional fragmentation, as well as high levels of exposure and dependency within variegated capitalism have restricted state capacity – a tendency only ruptured in temporary boom-cycles. This, we argue, entails some major implications, first, to address the present failures of social democratic forces and second, to gauge the concrete transformative potential at the politico-economic level of populist calls for 'breaking the chains' of austerity. [ABSTRACT FROM AUTHOR]

Often foreign countries levy sanctions in the attempt to foment discontent with a hostile government. But sanctions may provoke costly reactions by the leaders of the target country. This paper presents a model in which sanctions exhaust the target country economically and impair its government's fiscal capacity. Then, an office-motivated leader may find it convenient to default on foreign debt in order to free resources that she can invest to regain internal political support. The default thus becomes a defensive tool to partially dampen the internal political turmoil sanctions generate. [ABSTRACT FROM AUTHOR]

While human trafficking occupies a prominent place on the global policy agenda, many aspects of this phenomenon remain empirically underdeveloped. We examine the role of state capacity in these illicit supply chains, positing that trafficking flows may persist because even well-intentioned states might lack the requisite capacity to take effective action. Along those lines, we assess the impact of two facets of state capacity, bureaucratic efficacy and fiscal capacity, upon the probability of a country being a source or destination for the two types of human trafficking, forced labor and prostitution. We find that state capacity, particularly fiscal capacity, is significantly related to reduced labor and sex trafficking at both the source and destination levels. [ABSTRACT FROM AUTHOR]

This article presents new evidence on the efforts of states to collect and process information about themselves, their territories, and their populations. We compile data on five institutions and policies: the regular implementation of a reliable census, the regular release of statistical yearbooks, the introduction of civil and population registers, and the establishment of a government agency tasked with processing statistical information. Using item response theory methods, we generate an index of "information capacity" for 85 states from 1789 to the present. We then ask how political regime changes have influenced the development of information capacity over time. In contrast with the literature on democracy and fiscal capacity, we find that suffrage expansions are associated with higher information capacity, but increases in the level of political competition are not. These findings demonstrate the value of our new measure, because they suggest that different elements of state capacity are shaped by different historical processes. [ABSTRACT FROM AUTHOR]

We examine the fiscal consequences of sustained population loss in American cities. We find the starkest difference between growing and declining cities in their levels of social and economic distress: Declining cities have higher rates of poverty and crime. Our evidence also suggests that shrinking cities have less fiscal capacity than growing cities, although this relationship is complicated by an apparent nonlinearity: Shrinking and rapidly growing cities both have less fiscal capacity than high-demand cities that grow slowly. Lastly, both high distress and low fiscal capacity appear to predict further population loss. Together, our evidence suggests that population loss may both increase social problems and decrease the resources available to solve them, and that declining cities may enter vicious cycles that perpetuate further decline. [ABSTRACT FROM AUTHOR]

In the wake of the economic crisis in 2007, many municipal governments faced a variety of financial challenges. Scholars and practitioners call for citizen participation in various parts of government; however, it is unclear how efforts to engage the public can be sustained when municipalities undergo tough financial times. This research explores the impact of internal and external factors—(a) impact of financial crisis, (b) environmental and organizational complexity, and (c) administrative decentralization—on whether citizens are given the opportunity and resources to be involved in decision-making. Findings suggest that, despite their concerns for the diminishing fiscal capacity, local governments provide supportive institutional arrangements that may encourage public participation. Organizational complexity in local government also has a positive impact on facilitating public involvement and providing resource. Finally, the analyses indicate mixed findings for environmental complexity faced by local jurisdictions. [ABSTRACT FROM AUTHOR]

The economic theory of the state is often illustrated using examples in which the emergence of a stationary bandit—a ruler who is able to centralize military and fiscal capacity—improves property security. This article argues that the economic theory of the state also provides insight into the conditions when the emergence of a stationary bandit leads to property insecurity. In our reading of the economic theory of the state, the rise of a stationary bandit is only expected to improve property security writ large when coercive power is unquestioned, political institutions constrain rulers, powerful groups do not dominate the political process, and de facto property institutions are inefficient. The framework clarifies why Afghanistan’s first stationary bandit, Abdur Rahman, maintained state ownership over all land, waged violent repopulation campaigns, and drastically increased taxation before, during, and after centralizing state power from 1880 to 1901, while basic land use rights emerged from 1747 to 1880, a period when the state fell short of a monopoly on coercion. [ABSTRACT FROM AUTHOR]

• Examines how fiscal deficit reduction has been legitimated in the United Kingdom • Uses focus groups with taxpayers in order to explore how members of the public make sense of the fairness of austerity measures • Highlights how participants consistently identified themselves as hardworking taxpayers who face a high tax burden due to redistribution to undeserving poor and rich others • Argues that this leads to a 'legitimacy gap' in state redistribution that austerity measures can be seen to close Following the 2008 financial crisis, fiscal deficit reduction has become the name of the game for many Western states. This article uses focus group data to explore the legitimation of austerity in the United Kingdom. It is argued that fiscal consolidation speaks to real concerns citizens have over unfair redistribution to supposed 'undeserving' groups. The undeserving rich and poor are stigmatised during times of austerity since they are assumed to take more than they give from the public purse--leaving taxpayers, the assumption goes, to pick up the bill. By speaking to this legitimacy gap between prudent normative expectations and the lived experiences of state profligacy, fiscal consolidation can appear to speak to the interests of 'the taxpayer'--a group conceptualised as a sense of group position that arises from collective sense-making rather than a pre-given constituency. [ABSTRACT FROM AUTHOR]

This article examines the adoption of income taxes in Western economies since the 19th century. We identify two empirical regularities that challenge predictions of existing models of taxation and redistribution: While countries with low levels of electoral enfranchisement and high levels of landholding inequality adopt the income tax first, countries with more extensive electoral rules lag behind in adopting these new forms of taxation. We propose an explanation of income tax adoption that accounts for these empirical regularities. We discuss the most important economic consideration of politicians linked to owners of different factors, namely, the shift of the tax burden between sectors, and examine how preexisting electoral rules affect these political calculations. The article provides both a cross-national test of this argument and a microhistorical test that examines the economic and political determinants of support for the adoption of the income tax in 1842 in Britain. [ABSTRACT FROM AUTHOR]

This article explores the roles of racism and Whiteness in the decentralized governance structure and practice of a weighted student formula funding policy in an urban, West Coast school district. Specifically, it examines the ways in which a racialized struggle for fiscal authority played out at one urban high school where the immense racial disparities in education and achievement were starkly highlighted. The analysis of this struggle is framed by Critical Race Theory and suggests that Whiteness operates as a form of property that maintains White racial dominance in schooling and achievement. [ABSTRACT FROM AUTHOR]

Given the importance of competitive public sector wage rates in the recruitment and retention of talented employees, this article seeks to shed light on the determinants of competitive state government wages. Using panel data from the U.S. Bureau of Labor Statistics' Current Population Survey, public-private wage gaps are estimated for all 50 states between 1987 and 2002, and an explanatory analysis of the determinants of state-level public-private wage gaps is performed. Results indicate that, on average, state government employees enjoy a wage premium across the years covered, but when separated by gender, female state employees are found to experience an average wage premium, whereas male state employees are found to experience an average wage penalty. Surprisingly, state fiscal capacity is found not to influence state public-private wage gaps, but in particular cases, state unemployment, citizen liberalism, and unionization are found to be positively. [ABSTRACT FROM AUTHOR]

This paper undertakes a rigorous analysis of the effects of policies to respond to the looming demographic pressures in Europe and elsewhere. We examine the impact of fiscal adjustment by itself, and when pursued in combination with tax, labor and product market reforms, using the IMF's Global Fiscal Model (GFM), calibrated to the German economy, the euro area, and the United States. We also explore the international spillover effects of demographic pressures and associated fiscal adjustment, and the benefits of cooperative action. In addition, we examine the extent to which structural reforms (including tax reform) to boost productivity growth, labor participation, and product market competition could ameliorate the adverse short-term effects of adjustment. The results suggest (i) substantial spill-over effects of aging on debt sustainability through international financial channels; (ii) the preferred adjustment package is broad-based relying on both revenue and expenditure measures while avoiding increases in direct taxes; and (iii) there are substantial benefits from fiscal cooperation. Nonetheless, even a cooperative response has initial contractionary effects, and we show that these effects can be offset by combining fiscal adjustment with expeditious implementation of structural reforms in product and labor markets, as envisaged in the Lisbon Agenda. Moreover, the benefits accrue early and to all income-groups if the reforms are implemented as part of a package. [ABSTRACT FROM AUTHOR]

The papers in this symposium address fiscal sustainability within the context of aging related fiscal costs and argue that macroeconomic and political costs of delaying fiscal adjustments can be significant. The authors also analyse consolidation and reform programmes and confirm the importance of comprehensive fiscal consolidation programs that focus on recurrent public expenditure and growth incentives. A consensus seems to be firming up that fiscal rules help to contain deficit biases in fiscal policy and the proper functioning of EMU. [ABSTRACT FROM AUTHOR]

Rising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment. [ABSTRACT FROM AUTHOR]

Over the next decades, many OECD countries are anticipating large increases in public spending as a result of population ageing and other long-term structural trends. The need to put public finances on a sustainable footing is widely recognised, but progress has been uneven and slow. Some policy makers may feel that action can be deferred for a few years at little cost because of the long-term nature of the problem. This paper questions this perception by proposing a model of the political costs of consolidating public finances. The main finding is that even a short delay increases political cost of consolidation quite markedly when ultimately policy makers are facing a deadline by which sustainability must be restored. The conclusion is robust to a wide range of changes in assumptions and specification. A variant of the model shows that with an infinite horizon the incentive to consolidate is weaker, which highlights the importance of setting a deadline. [ABSTRACT FROM AUTHOR]

There is a concern in many countries that projected increases in the population age sixty-five and older will impose unsustainable burdens on future generations. These fiscal pressures are often expressed with reference to population dependency ratios. The authors argue that concerns about fiscal sustainability may be legitimate, but the use of population dependency ratios as indicators of fiscal pressures is not. They develop an approach to this issue that includes (1) a comprehensive coverage of the public sector, (2) a new methodology for capturing the fiscal effects of population aging, and (3) the integration of demographic, economic, and fiscal variables. This approach is applied to the Canadian fiscal system for the period from 2002-2003 to 2025-2026. The results indicate that the current fiscal system is sustainable over the long run and does not incorporate intergenerational inequities. [ABSTRACT FROM AUTHOR]

The article focuses on a monetary union, fiscal and monetary discipline have to go hand in hand if macroeconomic stability is to be maintained. It states that the question is how to set up the right institutions to achieve this stability in a credible manner and this policy brief proposes a new institutional arrangement for the euro area to restore fiscal discipline and responsibility for compliance entirely on the shoulders of the member states.