Search

This special issue addresses the question of why high levels of wealth inequality in many countries are not met with greater public discontent and demand for redistribution. The introduction contextualizes this focus by providing an overview on the social science literature explaining the patterns and drivers of wealth inequality in capitalist societies in the post-war era. The contributions enhance the understanding of why wealth inequality remains largely unchallenged by the public in the following ways: (a) through shedding light on the perceptions of different groups and asking how they perceive wealth inequality and the wealthy; (b) by asking why the non-wealthy seldom oppose wealth inequality; and (c) by reconstructing how political and economic elites conceive of wealth-related policies, such as wealth taxes. Future avenues for research, especially regarding the legitimation of wealth and the elaboration of a relational perspective, are outlined.

Taxes form the financial backbone of modern societies. They not only raise public revenues, but they are also an effective means of curbing the climate crisis and economic inequalities. Deciding who and what to tax and how to distribute the financial burden is therefore highly political. The aim of this chapter is to provide a conceptual overview of the main political and economic forces driving change in the tax state and the distributional implications that different forms of taxation entail. The chapter begins with an overview of the different forms of taxation, continues with a descriptive overview of some key patterns and discusses the main theoretical explanations that may account for the different developments of the tax state. It concludes with suggestions for future research.

Steuerpolitik ist zentral für jede Art von Staatstätigkeit. Dennoch widmet die Politikwissenschaft diesem Feld erstaunlich wenig Aufmerksamkeit. Das Ziel dieses Handbuchkapitels ist es, ein Grundverständnis für die Steuersysteme in entwickelten Demokratien aufzubauen, die historische Entwicklung nachzuzeichnen und Erklärungsansätze für temporäre und räumliche Politikunterschiede zu beschreiben. Das Kapitel endet mit einem Ausblick auf die steuerpolitischen Herausforderungen der Zukunft.

Research shows that low-income groups are increasingly left behind economically and excluded from the policy-making process of advanced democratic societies. This suggests that governments do not sufficiently address the needs of the poor. In this article, we explore to what extent labour power positively influences redistribution and policies for society overall and for the poor in specific. Following standard political economy arguments, a powerful working class leads to more egalitarian forms of capitalism as they are the main beneficiaries from redistribution. But do social-democratic parties and trade unions also represent the poorest in society, those who participate less in political decision-making and whose jobs are often not covered by collective bargaining agreements? Using comparative time-series data for 23 OECD countries since the 1980s, the findings suggest a positive role of the Left, at least for trade unions on poverty reduction, but less for specific policies benefiting the poor.

In this article, we analyze the political sources of cross-national differences in financing social protection around the world. The type of funding is not simply a technical detail but provides insights into the kinds of social contracts that underpin national social protection systems, reflecting different redistributive ambitions, conceptions of solidarity, and legitimacy among societies. Based on International Labour Organization (ILO) data, we explore to what extent past and contemporary political factors such as colonial and communist legacies as well as regime differences and war experiences account for cross-national differences in funding social protection across the globe. Our empirical evidence suggests that historically rooted political differences explain large parts of today’s highly divergent patterns in social security funding systems.

A vast literature documents that wealth inequality has risen throughout advanced democracies, especially the accumulation of wealth among the rich. Yet, instead of increasing wealth redistribution, governments have done the seemingly opposite. Key to understanding why democratic governments do not increase wealth redistribution in times of rising inequalities is to shed light on the public’s preferences. In this paper, we map the public’s redistributive preferences in fourteen countries based on new survey data. We show that traditional socioeconomic cleavages in preferences for wealth redistribution are undermined by diverging mobility expectations. People who expect to climb up the wealth distribution, mostly lower wealth groups, are less supportive of redistribution than people with high stakes of major wealth losses, mainly upper wealth groups. We show that future expectations among the rich and the poor have a highly moderating role for the class conflict over wealth redistribution. Moreover, the middle class, the decisive group in democracies, is highly unresponsive to future prospects. The findings suggest that the middle class does not have much to lose or to win, and therefore, wealth redistribution is of low salience among this group.

How has globalization changed the tax state? Governments around the world have cut taxes in favor of capital owners and multinational corporations since the 1980s. Yet, it is debated whether globalization has brought about a race-to-the-bottom. While most governments have cut direct tax rates, this trend is not homogeneous and far from the predicted zero tax on capital. The goal of this chapter is to discuss first, what tax competition is and how it works. Second, it reviews the main contributions on tax competition from a political science perspective. A general consensus is that actors, institutions and the socio-economic context mitigate the race-to-the-bottom. However, the main focus has been on corporate income taxes, neglecting other types of taxes. The recent decline of wealth taxes suggests however, that political science needs to re-open the debate on the race-to-the-bottom hypothesis.

Since the creation of monetary union, European governments have received loans from the international financial markets at low interest rates. The recent sovereign debt crisis has, however, once more revealed the structural dependence of capitalist governments on the capital markets. Countries such as Spain and Greece are charged unsustainable interest rates and their policy decisions have come under scrutiny by international bond holders who fear losing their investments. Based on a unique dataset of European tax policy decisions from 2008 to 2010, we show that financial market pressure, in the form of rising bond yields, has forced European governments to raise their taxes, especially in the more regressive field of indirect taxes. The findings suggest that capitalist democracies have little political room to maneuver and to conduct redistributive politics at times of high fiscal stress.

For a long time, governments relied heavily on trade taxes as the main source of public finance, and for some countries, mainly less developed ones, they still account for a large share of revenue. Yet, with trade liberalization, governments have been forced to abandon these easy-to-collect taxes and to adopt modern hard-to-collect taxes, mainly internal income and consumption taxes. Surprisingly, we know little about how governments across the world have addressed this common challenge. In this paper, we analyze the rise of the most important present taxes: the personal and corporate income tax, the general sales tax and the value-added tax. Based on a self-coded dataset, we provide a historical-descriptive outline of the expansion of modern taxes since 1842 and test the effect of trade liberalization on the probability to adopt hard(er)-to-collect taxes. While trade is an important determinant for the legislation of modern taxes, we find that its influence is not universal but depends on the tax...

Comparative welfare state research is directed mainly toward the development of welfare states in advanced democracies, although the majority of people live outside the OECD and often face graver social risks arising from poverty and starvation. To secure a minimum standard of living, nearly all countries have introduced social programs to protect their citizens. Yet the timing of when governments take on the responsibility of providing social protection varies decisively across the world. Using data for 177 territories and independent states over the period from 1820 to 2013, we illustrate how social security legislation has emerged throughout the world. Although we find that the patterns and pathways vary strongly between different regions, the evidence shows that the proliferation of social protection is a transnational event: regional diffusion and membership in the International Labour Organization matter irrespective of the regional and temporal context.

Globalisation has triggered a downwards trend in direct taxation as governments compete for internationally mobile capital. This popular postulation has blurred the attention to potential upward constraints on tax policy-making emanating from globalised capital markets. In this paper, we illustrate when and how capital markets exert an upward pressure on taxes. While the increasing access to international capital allowed governments in developed democracies to indulge their voters with deficit-financed spending, the most recent crisis has shown that this is no panacea. When international loans become costly, governments have to revert to raising revenue domestically. Using comparative time-series data since the 1980s, we investigate how rising bond yields affect the number and the direction of tax reforms, as well as the tax mix in the OECD. The empirical analysis provides some evidence that international capital markets place an upward pressure on taxes, recently above all on consumption taxes. Yet, gove...

With the outbreak of the financial crisis in 2008, European governments extensively intervened to avert a severe economic recession. Taxation is a crucial instrument to achieve such economic objectives, but it also represents a redistributive tool in democratic societies. Generally, left-wing parties are more supportive of progressive taxes and redistribution than right-wing governments. As a crisis response, one could assume that European governments, especially social-democratic ones, reinforced a redistributive stance to compensate for the substantial amounts of public money used to bail out financial institutions. Based on the tax reforms introduced between 2008 and 2010, the paper explores the tax strategies adopted by European governments. The findings do not reveal a direct effect of party politics on taxation but rather show that pressures from the capital markets significantly restrained governments’ policy capacities to act.

Dieser Beitrag erortert Grundlagen der Steuerpolitik. Er definiert die Zwecke der Besteuerung, unterscheidet die wichtigsten Steuertypen, diskutiert generelle steuerpolitische Entwicklungen der letzten 50 Jahre und vergleicht die nationalen Steuersysteme von Landern innerhalb und auserhalb der OECD. Weitere Themen sind die Bestimmungsfaktoren nationaler Steuerpolitik und die Auswirkungen der Besteuerung auf Umverteilung und Wirtschaftswachstum.

It pays to be a tax haven. Ireland has become rich that way. Why do not all countries cut their capital taxes to get wealthy? One reason is structural. As the standard model of tax competition explains, small countries gain from competitive tax cuts while large countries suffer. Yet not all small (large) countries have low (high) capital taxes. Why? The reason, we argue, is political. While the standard model assumes governments to be democratic, more than a third of countries worldwide are non-democratic. We explain theoretically why autocracies are less likely to adjust to competitive constraints and test our argument empirically against data on the corporate tax policy of 99 countries from 1999 to 2011. German Science Foundation via the Collaborative Research Center [597]

First Online: 10 March 2017 Tax policy is of central importance to every state. Without tax revenue, all other government policies, including welfare policies, are bound to fail. In addition to providing the financial basis for the welfare state, the tax system is potentially the most powerful instrument for income redistribution. In this contribution we shed light on the effects of tax competition on economic inequality by mapping the co-development of the changing tax systems and income (re)distribution since the 1980s. We argue that governments’ tax strategies and their effect on inequality are much more complex and heterogeneous than is often acknowledged. Despite the common constraint emanating from global capital markets, governments still have room to manoeuver. The extent to which OECD governments have used this room, however, varies considerably.

Within a unified Europe that is heading towards ever more harmonization, it is interesting to examine why there exists such diversity in tax regimes among its countries. Is it possible that some of the decisions pertaining to taxation are based on latent cultural aspects? This study, set in a purely European context, seeks to analyze tax variations within Europe through the lens of cultural variations. Specifically, how trust, confidence and equality matter with regard to tax revenues and tax progressivity. Within this regard, we achieved strong results linking trust and confidence to higher tax revenues and higher tax progressivity. That is, where trust among societal members is low and confidence in public institutions is low, regimes opt for low tax revenues and lenient tax rates. It is argued that where mistrust is high, the issue of income distribution between societal members is likely to stay within the private or individual sphere. Conversely, countries with high trust among societal members exhibit higher levels of income distribution by delegating more responsibility to public institutions, reflected in higher tax revenues and more progressive tax structures.

The recent financial and economic crisis is intensifying the pressure for budget consolidation,increasing the likelihood of cuts in social services throughout Europe. One government after another is bringing forward a budget consolidation programme. Cuts are envisaged above all in social services and so the question arises of what effects this will have on welfare states in EU member countries and on Social Europe in general. In this study cuts in social systems are analysed and compared, both planned and already undertaken. Regardless of the different magnitudes of the austerity efforts and the policy fields concerned there can be no doubt that all austerity programmes are regressive in nature and that the option of raising incomes is being exercised far less frequently than spending cuts and this applies especially in the social realm.

Die jüngste Weltfinanzkrise hat weltweit zu starken Belastungen der öffentlichen Finanzen geführt. In der Folge dieser Entwicklung gerieten einige Eurozonen-Mitgliedsländer in Solvenzkrisen und mithin die gesamte Europäische Wahrungsunion (EWU) in Gefahr. In der Folge dieser Entwicklungen wurden überall in der Europäischen Union Sparprogramme zur Haushaltskonsolidierung aufgelegt. In der vorliegenden Arbeit werden anhand von sechs ausgewählten Ländern die finanzpolitischen Reaktionen und die Auswirkungen auf die Sozialpolitik untersucht und der Frage nachgegangen, ob sich Schlussfolgerungen für die Herausbildung eines Europäischen Sozialmodells ziehen lassen.

policies regulated by soft forms of coordination whereas others are subject to hierarchical modes? Building on a discursive institutionalist approach, the book draws attention to the role of policy discourses in European decision-making. Although previous studies illustrate how discourses shape policy outcomes, they neglect to explain particular governance structures. The book addresses this shortcoming and explores the evolution of business taxation and monetary regulation, cases of soft and supranational governance.

The European economy was hit by a confidence shock in 2009 when the Greek government of Papandreou discovered the true amount of public deficit. The subsequent loss of trust in European fiscal governance reduced financial markets' willingness to lend to indebted governments. The European Union established the Financial Stability Facility to support debt-ridden states but without lasting success. The continuously rising Greek bond yields suggest that the information transmitted from political leaders did not reduce investors' risk perceptions. We develop a theoretical framework, in which financial market participants do not know the real rate of return on Greek assets but infer it from the signals emitted by informed European governments. Based on a unique news dataset, we investigate the impact of good and bad news from the European institutions on the Greek interest spread. The results demonstrate that the noise around the European decision-making process substantially raised the bailout cost.

The means by which macroeconomic goals such as growth, price stability, and full employment are managed have gone through major changes in the European Union. The introduction of a single currency and the Code of Conduct on harmful tax competition are two prime examples of this transformation. While monetary policy is managed hierarchically from the European level, taxation is regulated via soft forms of coordination. Why has this institutional set-up emerged? And what factors have hindered supranational cooperation in the tax field? Based on a historical analysis of their policy discourses the paper demonstrates that a common experience among policy actors seems to be a prerequisite for the delegation of economic policy making to supranational institutions. While the OMC is suboptimal in the tax field from an economic perspective, it may therefore be a first step towards more efficient forms of coordination.