Adjusting National Tax Policy to Economic Internationalization Strategies and Outcomes

Ganghof, Steffen

doi:10.1093/0199240922.003.0013

Cited by 99 publications

(26 citation statements)

References 33 publications

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“…For example, during the 1980s and 1990s globalization exerted a growing influence in all of these economies. In particular, increases in capital mobility put pressure (real or imagined) on policy makers to reduce tax rates (Ganghof 2000;Genschel 2002). This also was a period of declining unionization in many countries (Western 1997;Ebbinghaus and Visser 1999).…”

Section: Confounding Factors?mentioning

confidence: 99%

Inequality, public opinion and redistribution

Kenworthy¹,

McCall²

2007

Socio-Economic Review

333

225

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. According to the "median-voter" hypothesis, greater inequality in the market distribution of earnings or income tends to produce greater generosity in redistributive policy. We outline the steps in the causal chain specified by the hypothesis and attempt to assess these steps empirically. Prior studies focusing on cross-country variation have found little support for the median-voter model. We examine over-time trends in eight nations during the 1980s and 1990s. Here too the median-voter hypothesis appears to have little utility. Terms of use: Documents inIncome inequality has two components: (1) "market" inequality and (2) government redistribution via taxes and transfers. In principle, the two can be combined in any of a variety of ways: low market inequality with high redistribution, low market inequality with low redistribution, high market inequality with moderate redistribution, and so on. Of particular interest in the study of inequality is what happens when market inequality is high or increases. Does government compensate with high redistribution in order to secure a relatively egalitarian distribution of posttax-posttransfer income? According to one influential theoretical approach, that is indeed what tends to happen. This approach is based on a median-voter model of the politics of redistribution. Its best-known exposition is by Allan Meltzer and Scott Richard (1981). A higher level of market inequality implies a greater distance between * Forthcoming in Socio-Economic Review. Kenworthy: Department of Sociology, University of Arizona, lane.kenworthy@arizona.edu. McCall: Department of Sociology, Northwestern University, l-mccall@northwestern.edu. We are grateful to the Russell Sage Foundation for financial support, to Julian Brash for research assistance, to Jonathan Kelley for generously sharing his calculations, and to Klaus Armingeon, Jessica Epstein, Lloyd Gruber, Julia Lynch, Jonas Pontusson, David Rueda, Stefan Svallfors, and two anonymous SER reviewers for comments on earlier drafts. Inequality, Public Opinion, and Redistribution2 mean and median (pretax-pretransfer) income, with the latter further below the former. The lower the median relative to the mean, the more the median income person or household is likely to benefit from government redistribution, in the sense that the transfers she receives will exceed her share of the tax burden. Hence the greater the amount of redistribution she will favor. More market inequality thus leads t...

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Section: Confounding Factors?mentioning

confidence: 99%

Inequality, public opinion and redistribution

Kenworthy¹,

McCall²

2007

Socio-Economic Review

333

225

View full text Add to dashboard Cite

show abstract

“…Cuts in tax reliefs on reinvested profits also bolster revenues: governments can maintain foreign investment and collect taxes from it if the investment comes from nations that provide credits for foreign taxes paid and have significant taxes on reinvested profits. Moreover, statutory marginal tax rates serve as especially important cues to holders of mobile assets (e.g., Ganghof 2000).…”

Section: Internationalization and Taxation: An Alternative Theoreticamentioning

confidence: 99%

The New Political Economy of Taxation in Advanced Capitalist Democracies

Swank

Steinmo

2002

American Journal of Political Science

368

233

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We articulate and test an explanation for the remarkable change and continuity in contemporary tax policy in capitalist democracies. We argue that internationalization, domestic eco- T he globalization theory of taxation suggests that the ability of mo bile asset holders to exit national jurisdictions forces policy makers to compete for investment (Tanzi 1995). In the strongest versions of the theory, taxes on capital and other mobile asset holders such as professionals are progressively reduced to the "lowest common denominator." Tax burdens on relatively immobile factors and activities (i.e., most labor and consumption) are increased (Christiansen, Hagen, and Sandmo 1994). Yet, the empirical record of tax policy change does not fit the globalization thesis; although statutory tax rates, brackets, and investment incentives have been reduced almost everywhere, we find a remarkable stability in the levels and distribution of tax burdens.Here, we argue that the tax impacts of internationalization are important, but in more complex ways than globalization theory suggests. Specifically, through analysis of data from fourteen developed democracies for 1981 to 1995, we show that rises in capital mobility and trade have systematically preceded cuts in statutory tax rates. We also demonstrate, however, that three factors-internationalization, domestic economic change, and budgetary forces-simultaneously constrain changes in tax burdens and, together, help explain the complexity of tax policy outcomes.

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“…16 However, there may be more shifting of the tax burden taking place than is immediately apparent from Figure 2. 17 The nearly constant percentage of the personal income tax in total tax revenue may mask a shift of the tax burden from mobile to immobile sources of personal income, that is, from capital to labor income. The constancy of the tax ratios may conceal changes in the size of the underlying tax bases.…”

Section: Did Tax Competition Change the Structure Of Taxation?mentioning

confidence: 99%

Globalization, Tax Competition, and the Welfare State

Genschel¹

2002

Politics & Society

161

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Does globalization undermine the fiscal basis of the welfare state? Some observers are not convinced. They claim that aggregate data on Organization for Economic Cooperation and Development countries show no drop in tax levels and conclude from this that tax competition is not a serious challenge for the welfare state. This conclusion is unwarranted. The article shows that tax competition systematically constrains national tax autonomy in a serious way. It prevents governments from raising taxes in response to rising spending requirements and from detaxing labor in response to growing unemployment.

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Adjusting National Tax Policy to Economic Internationalization Strategies and Outcomes

Cited by 99 publications

References 33 publications

Inequality, public opinion and redistribution

Inequality, public opinion and redistribution

The New Political Economy of Taxation in Advanced Capitalist Democracies

Globalization, Tax Competition, and the Welfare State

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