Post on 22-Dec-2015
Taxes: Extracting resources
• Income
• Consumption
• Social insurance
• Wealth
• Corporation
• Tax expenditures
Varieties of tax policy
• United States– Progressive
– Heavy corporate burden
– Light consumption tax
– Lots of tax expenditures
• Sweden– Regressive
– High consumption tax
– Light on active capital
Policy making regimes
Corporatism/
PR
Pluralism/
FPTP
Parliamentary
Sweden
(Coherence & compromise)
United Kingdom
(Incoherence)
Presidential
United States
(Fragmentation)
U.S.: Fragmentation
• Fragmented political authority
• Interest groups: Opportunities for narrow demands Narrow organization of interests and demands
Heavy tax rates butNarrow tax expenditures
• Weak parties, interest groups Hard to make social bargains
Liberals reject consumption tax • Even though it could finance social spending
Sweden: Coherence and compromise
• Proportional representation Stable Social Democratic dominance– But minority = need for compromise
• Interest groups and politicians: Incentives to compromise
• Neo-corporatism, strong parties– Makes bargaining easier
Broad policy bargains– E.g., consumption taxes for social spending
United Kingdom:Incoherence and instability
• Centralized authorityPower for policy change
Adversarial party politics
Politicians: Incentives to campaign on polarized promises• Keep them without compromise
• But administratively impossible to reverse all previous choices
Blame avoidance:Tax visibility
• Least popular taxes are most visible– Property and income
• Regressive, but less-visible taxes accepted– Social insurance and consumption
Big spenders rely more on less-visible taxes
• How?– Social bargains using neo-corporatist structures
Blame avoidance:Tax cut visibility
• Bush tax cuts– Far from median voter
BUT
– Overall costs delayed
– Sunset provisions hide cost
– Skewed distributive effects delayed
– Immediate (but small), visible benefits for everyone
– Framing
Conclusion
• Effects of institutional-interest group regimes– Fragmented
– Inclusive
– Adversarial
• Institutions shape actors’ policy demands
• Policy design crucial method of blame-avoidance
• Policy “choices” don’t necessarily reflect intentions
Debating policymaking regimes
• Four policymaking regimes
1. Westminsters (Parliamentary, FPTP) pluralist interests
2. Parliamentary, PR, neo-corporatist interests
3. Presidential, weak parties, pluralist interests
4. -- Westminster plus federalism
• Each group comes up with reasons why their regime is best– Define “best” – what criteria are you using?– If you use “democratic” as a criterion, define what you
mean– Examples of types of policies– All group members take notes