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Taxing the Rich: A History of Fiscal Fairness in the United States and Europe
A groundbreaking history of why governments do―and don't―tax the rich
In today's social climate of acknowledged and growing inequality, why are there not greater efforts to tax the rich? In this wide-ranging and provocative book, Kenneth Scheve and David Stasavage ask when and why countries tax their wealthiest citizens―and their answers may surprise you.
Taxing the Rich draws on unparalleled evidence from twenty countries over the last two centuries to provide the broadest and most in-depth history of progressive taxation available. Scheve and Stasavage explore the intellectual and political debates surrounding the taxation of the wealthy while also providing the most detailed examination to date of when taxes have been levied against the rich and when they haven't. Fairness in debates about taxing the rich has depended on different views of what it means to treat people as equals and whether taxing the rich advances or undermines this norm. Scheve and Stasavage argue that governments don't tax the rich just because inequality is high or rising―they do it when people believe that such taxes compensate for the state unfairly privileging the wealthy. Progressive taxation saw its heyday in the twentieth century, when compensatory arguments for taxing the rich focused on unequal sacrifice in mass warfare. Today, as technology gives rise to wars of more limited mobilization, such arguments are no longer persuasive.
Taxing the Rich shows how the future of tax reform will depend on whether political and economic conditions allow for new compensatory arguments to be made.
In today's social climate of acknowledged and growing inequality, why are there not greater efforts to tax the rich? In this wide-ranging and provocative book, Kenneth Scheve and David Stasavage ask when and why countries tax their wealthiest citizens―and their answers may surprise you.
Taxing the Rich draws on unparalleled evidence from twenty countries over the last two centuries to provide the broadest and most in-depth history of progressive taxation available. Scheve and Stasavage explore the intellectual and political debates surrounding the taxation of the wealthy while also providing the most detailed examination to date of when taxes have been levied against the rich and when they haven't. Fairness in debates about taxing the rich has depended on different views of what it means to treat people as equals and whether taxing the rich advances or undermines this norm. Scheve and Stasavage argue that governments don't tax the rich just because inequality is high or rising―they do it when people believe that such taxes compensate for the state unfairly privileging the wealthy. Progressive taxation saw its heyday in the twentieth century, when compensatory arguments for taxing the rich focused on unequal sacrifice in mass warfare. Today, as technology gives rise to wars of more limited mobilization, such arguments are no longer persuasive.
Taxing the Rich shows how the future of tax reform will depend on whether political and economic conditions allow for new compensatory arguments to be made.
288 pages, Hardcover
First published March 22, 2016
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January 29, 2025
A really interesting book with an empirical argument with the reasons for why and when substantial taxation of high income and wealth occurs. David Stasavage is one of the most renowned experts on the history of taxation in Western Europe and this book benefits also from his longer-term perspective.
Scheve and Stasavage argue that governments do not tax 'the rich' (which I must say is defined quite broadly within the book) because of rising inequality, some growth in the political engagement of working and poor classes, their greater ability to pay or some static equality argument. One would think that governments would resort to income tax for the rich when they exhausted all other sources of income - like borrowing or increasing existing tax rates, but the opposite was true in the First World War, and especially for the countries that mobilised most heavily. This shows that taxation of the rich occurs when there is a general public understanding that the actions of the state disproportionately help or advantage the rich, the owners of the capital, at the expense of the less privileged.
The core of the book is thus the argument that ‘Societies tax the rich when people believe that the state has privileges the wealthy. So fair compensation requires the rich to be taxed more than the rest.’ This means that people support taxing the rich when it conforms to the ideas of justice that they hold - what they call the ‘compensatory argument’. And the authors argue - based on well-developed empirical proofs - that this has been predominantly in times of wars requiring mass conscription and their aftermaths - when 'equality of sacrifice' moves from the compensation of the sacrifice of income to compensating the sacrificing of lives. The mass mobilisation enabled the governments to argue for increased top marginal tax rates on the basis of compensating the poor (or be it middle classes) for taking the burden of conscription.
The authors develop this argument on the basis of a study of 20 countries across Western and Northern Europe that enacted some forms of progressive income taxes between 1800 and 2013. This was with England being the first country to enact income tax in 1799 under Pitt the Younger in order to pay for the Napoleonic Wars, but then abolished it for 25-ish years and only re-established it in 1842 under Peel, which is very interesting as he is the creator of the modern Conservative party and the UK was effectively the only large country in Western Europe that had an income tax in the second half of the 19th century - the height of its imperial period.
They show that the 'ability to pay', 'inequality', 'democratisation' or 'equal treatment' arguments do not hold over this time period. While there are still some methodological difficulties as top marginal tax rates are not always published clearly, they do a great job of developing complex assessments of effective tax rates. They also do not consider the spending side of taxation to a greater extent, only very briefly in the early parts of the book.
There is a great chapter on the inheritance tax and how it was the predominant tax on wealth, with over a thousand-year history. It was the most easily implementable tax, but even this grew to the greatest extent during times of mass mobilisation wars.
I would say that the greatest limitation of the book is that it considers democratisation quite narrowly. They look at universal male suffrage as the best proxy for ‘democratisation’, but also at competitive elections and consider the growth of socialist or socio-democratic parties. However, their narrative analysis is quite rudimentary and they omit the possibility of the impact of the cultural hegemony of wealth and capitalism, as a source for an opposition to greater tax on wealth or the definitions of fairness within the tax systems.
One of the greatest contributions of this book is exactly this debate of the historical developments and especially understanding of the taxation of the wealthy. Is a flat tax more fair than a progressive one? Should the poorer people be compensated for them paying more in excise taxes and in the higher prices of goods on which are placed tariffs? This book greatly shows the historical debates on taxation, for instance, that John Stuart Mill supported an equivalent of today's 'personal allowance' and on top of a flat tax on income, or how Jean Jacques Rousseau supported taxes on luxuries like chandeliers. There are interesting historical examples and arguments from the 13th and 14th century Siena (which was ruled by an oligarchic structure of ‘the Council of the Nine’, which understood that taxes must be levied equally on the rich and the poor, so they had both income tax and excise levies, as well as debt - where Stasavage surely builds on his earlier fascinating work on public debt in European city states during late Middle Ages), or the Canada of the First World War (which was ruled by Conservatives who waited more than 2 years to establish the income tax and relied on tariffs and consumption taxes.).
The penultimate chapter of the book develops their argument for the impact of mass-mobilisation wars on income equality. They effectively argue that the extreme rise in income and inheritance taxation of the very wealthy was a historical accident of the specific nature of wars that were fought in the first half of the twentieth century (plus the American Civil War, which saw the highest rate of marginal income tax at 15% - although for most of the war, it was around 10% - which was the highest rate during the whole of 19th century. This shows the impact of railroads on mass mobilisations, as opposed to some suggesting the advent of mass war arising from the rise of nationalism and 'citizen armies'. This is supported by, in contrary to the public perception, the fact that the French Revolution does not constitute a significant break in the size of armies (in France it went from 300k in the late 18th century to 800k when Napoleon Invaded Russia to 1,5 mil in 1914).
This book is fascinating, especially its empirical support against using the arguments labelling taxing the rich as ‘fair’ would be enough to create public support for it. Regardless of why this is so - and they do not exactly show why people would be so willing to act against their interests - it is an interesting and useful insight for public policy, especially for people who would want to use progressive taxation in political arguments for greater opportunity or equity. If you want to pass more progressive taxation legislation, make arguments on the basis that the existing structure unfairly benefits the richer and more privileged.
Interestingly, and these are my thoughts after reading this book, the Covid pandemic presented a chance for exactly this kind of redistribution and increased taxes on the wealthy. The middle-class people, whose jobs were easily moved to a remote setting, had large excesses of liquid funds, that contributed to speculative bubbles and inflation. This hurt particularly the lower-income people who both had to do their jobs physically and then were 'taxed' by the cost of living crisis - inflation of 2022 and afterwards. I wonder how much progressive parties in Western Europe and the Americas failed to use this opportunity for greater redistribution - or compensation - of the working classes, and this was later exploited by the populist leaders in the anti-incumbency wave in the great election year of 2024. I think this was a clear case of when government policies unequally benefited one group of people (the wealthier, white-collar workers) and the blue-collar workers were not compensated enough.
Scheve and Stasavage argue that governments do not tax 'the rich' (which I must say is defined quite broadly within the book) because of rising inequality, some growth in the political engagement of working and poor classes, their greater ability to pay or some static equality argument. One would think that governments would resort to income tax for the rich when they exhausted all other sources of income - like borrowing or increasing existing tax rates, but the opposite was true in the First World War, and especially for the countries that mobilised most heavily. This shows that taxation of the rich occurs when there is a general public understanding that the actions of the state disproportionately help or advantage the rich, the owners of the capital, at the expense of the less privileged.
The core of the book is thus the argument that ‘Societies tax the rich when people believe that the state has privileges the wealthy. So fair compensation requires the rich to be taxed more than the rest.’ This means that people support taxing the rich when it conforms to the ideas of justice that they hold - what they call the ‘compensatory argument’. And the authors argue - based on well-developed empirical proofs - that this has been predominantly in times of wars requiring mass conscription and their aftermaths - when 'equality of sacrifice' moves from the compensation of the sacrifice of income to compensating the sacrificing of lives. The mass mobilisation enabled the governments to argue for increased top marginal tax rates on the basis of compensating the poor (or be it middle classes) for taking the burden of conscription.
The authors develop this argument on the basis of a study of 20 countries across Western and Northern Europe that enacted some forms of progressive income taxes between 1800 and 2013. This was with England being the first country to enact income tax in 1799 under Pitt the Younger in order to pay for the Napoleonic Wars, but then abolished it for 25-ish years and only re-established it in 1842 under Peel, which is very interesting as he is the creator of the modern Conservative party and the UK was effectively the only large country in Western Europe that had an income tax in the second half of the 19th century - the height of its imperial period.
They show that the 'ability to pay', 'inequality', 'democratisation' or 'equal treatment' arguments do not hold over this time period. While there are still some methodological difficulties as top marginal tax rates are not always published clearly, they do a great job of developing complex assessments of effective tax rates. They also do not consider the spending side of taxation to a greater extent, only very briefly in the early parts of the book.
There is a great chapter on the inheritance tax and how it was the predominant tax on wealth, with over a thousand-year history. It was the most easily implementable tax, but even this grew to the greatest extent during times of mass mobilisation wars.
I would say that the greatest limitation of the book is that it considers democratisation quite narrowly. They look at universal male suffrage as the best proxy for ‘democratisation’, but also at competitive elections and consider the growth of socialist or socio-democratic parties. However, their narrative analysis is quite rudimentary and they omit the possibility of the impact of the cultural hegemony of wealth and capitalism, as a source for an opposition to greater tax on wealth or the definitions of fairness within the tax systems.
One of the greatest contributions of this book is exactly this debate of the historical developments and especially understanding of the taxation of the wealthy. Is a flat tax more fair than a progressive one? Should the poorer people be compensated for them paying more in excise taxes and in the higher prices of goods on which are placed tariffs? This book greatly shows the historical debates on taxation, for instance, that John Stuart Mill supported an equivalent of today's 'personal allowance' and on top of a flat tax on income, or how Jean Jacques Rousseau supported taxes on luxuries like chandeliers. There are interesting historical examples and arguments from the 13th and 14th century Siena (which was ruled by an oligarchic structure of ‘the Council of the Nine’, which understood that taxes must be levied equally on the rich and the poor, so they had both income tax and excise levies, as well as debt - where Stasavage surely builds on his earlier fascinating work on public debt in European city states during late Middle Ages), or the Canada of the First World War (which was ruled by Conservatives who waited more than 2 years to establish the income tax and relied on tariffs and consumption taxes.).
The penultimate chapter of the book develops their argument for the impact of mass-mobilisation wars on income equality. They effectively argue that the extreme rise in income and inheritance taxation of the very wealthy was a historical accident of the specific nature of wars that were fought in the first half of the twentieth century (plus the American Civil War, which saw the highest rate of marginal income tax at 15% - although for most of the war, it was around 10% - which was the highest rate during the whole of 19th century. This shows the impact of railroads on mass mobilisations, as opposed to some suggesting the advent of mass war arising from the rise of nationalism and 'citizen armies'. This is supported by, in contrary to the public perception, the fact that the French Revolution does not constitute a significant break in the size of armies (in France it went from 300k in the late 18th century to 800k when Napoleon Invaded Russia to 1,5 mil in 1914).
This book is fascinating, especially its empirical support against using the arguments labelling taxing the rich as ‘fair’ would be enough to create public support for it. Regardless of why this is so - and they do not exactly show why people would be so willing to act against their interests - it is an interesting and useful insight for public policy, especially for people who would want to use progressive taxation in political arguments for greater opportunity or equity. If you want to pass more progressive taxation legislation, make arguments on the basis that the existing structure unfairly benefits the richer and more privileged.
Interestingly, and these are my thoughts after reading this book, the Covid pandemic presented a chance for exactly this kind of redistribution and increased taxes on the wealthy. The middle-class people, whose jobs were easily moved to a remote setting, had large excesses of liquid funds, that contributed to speculative bubbles and inflation. This hurt particularly the lower-income people who both had to do their jobs physically and then were 'taxed' by the cost of living crisis - inflation of 2022 and afterwards. I wonder how much progressive parties in Western Europe and the Americas failed to use this opportunity for greater redistribution - or compensation - of the working classes, and this was later exploited by the populist leaders in the anti-incumbency wave in the great election year of 2024. I think this was a clear case of when government policies unequally benefited one group of people (the wealthier, white-collar workers) and the blue-collar workers were not compensated enough.
September 8, 2016
A strange thing happened to me with this book. I thought I was looking at a study of the political economy of taxation that balanced major theoretical arguments with a rich long term longitudinal data set that can help in answering outstanding issues by reference to data analysis results. I got some of that, of course, but I also found out that World War 1 and World War 2 figured into tax policies throughout the west and that our current situation needs to account for this. Political economy and mobilization for war - all in the same study!
Scheve and Stasavage have written an interesting book on the subject of taxing the rich. This is one of those topics that seems to always be on some public agenda, especially in an election year. At the same time, however, there is strangely little that is agreed on about taxes. Are they too high or too low? Are they fair? Is the person I am voting for (or against) likely to raise (or lower) my taxes? This is all the stuff of high rhetoric and low name calling but if you stop to think about it, there is surprisingly little in the way of what can be taken for granted about taxes. In terms of elections, there are also lots of anomalies to consider as well. For example, in recent years (the current election notwithstanding), U..S. Republicans have presented this odd coalition of rich guys who don't like to pay taxes and a larger group of poorer people who would seem to not have much in the way to income or wealth to tax but instead support social issues. The reverse has often been true with the Democrats. This year is far too fragmented to know how tax issues sort themselves out.
The Scheve and Stasavage book is an historical study of the activity of "taxing the rich" in western economies over the past two centuries. The authors are both political scientists, although they also act like economists. They map out the basic arguments that have been advanced through the years for taxing the wealthiest in a society. These arguments concern how and why the rich should or should not be the focus of tax efforts. Should the tax burden be equally shared? Should taxes be proportional to the ability to pay? Should taxes on the rich be guided by the need to compensate those who are poor for advantages enjoyed by the rich and supported by government? Of course, economic actors often have mixed motives in attempting to change tax laws and policies, but these basic arguments provide the rationales for how any tax policies can be justified. This part of the book is interesting, if you like economic theories, but it is also a bit on the dry side. If you did not already guess, there are numerous disagreements about the fundamentals of taxation and setting up an empirical analysis is far from easy. The authors then report on their efforts to test various hypotheses about taxation making use of their data base. They are very good at research design and seem very careful in their analyses.
A key insight from this book is that when the rich have been taxed the most heavily, it has taken place during violent mass conscription war situations when large numbers of citizens are drafted and put at risk in war. Under those circumstances, the politics of the times moves toward "conscripting capital" - through higher individual tax rates on the wealthy and windfall profits and capital levies on those business people who are exempted from serving directly and who may have earned windfall profits from the war when other citizens are dying from combat. It is key that such wartime situations provide the setting when efforts to tax the rich substantially can succeed politically. This is a reasonable claim and supported by the data analysis in the book. I had not tied tax policy over the century to the World Wars, and I learned something by understanding the linkage.
The overall results of the book are mixed and the overall argument is complex. The data analysis results will not provide much consolation to ideologists from the right or the left. Governments typically do not like to tax the rich heavily. There are lots of reasons for this, which a reader may or may not agree with, depending on their perspective. The old arguments from high tax rates are not as persuasive as they once were, but future tax policies are not set in stone either.
The book is worth working through. The analyses are accessible. The authors are not selling a particular position on taxation, in terms of desired policies. ... Or if they are, they are not selling it too hard to raise questions about the analysis. The intent seems to be that discussions of taxation of the rich, especially in the context of current debates on inequality, will benefit from some added clarity about the historical records for tax policies.
This is not the most exciting book and the style is academic and a bit dry. It is very interesting, however, and well worth reading if you are interested in taxes and elections.
Scheve and Stasavage have written an interesting book on the subject of taxing the rich. This is one of those topics that seems to always be on some public agenda, especially in an election year. At the same time, however, there is strangely little that is agreed on about taxes. Are they too high or too low? Are they fair? Is the person I am voting for (or against) likely to raise (or lower) my taxes? This is all the stuff of high rhetoric and low name calling but if you stop to think about it, there is surprisingly little in the way of what can be taken for granted about taxes. In terms of elections, there are also lots of anomalies to consider as well. For example, in recent years (the current election notwithstanding), U..S. Republicans have presented this odd coalition of rich guys who don't like to pay taxes and a larger group of poorer people who would seem to not have much in the way to income or wealth to tax but instead support social issues. The reverse has often been true with the Democrats. This year is far too fragmented to know how tax issues sort themselves out.
The Scheve and Stasavage book is an historical study of the activity of "taxing the rich" in western economies over the past two centuries. The authors are both political scientists, although they also act like economists. They map out the basic arguments that have been advanced through the years for taxing the wealthiest in a society. These arguments concern how and why the rich should or should not be the focus of tax efforts. Should the tax burden be equally shared? Should taxes be proportional to the ability to pay? Should taxes on the rich be guided by the need to compensate those who are poor for advantages enjoyed by the rich and supported by government? Of course, economic actors often have mixed motives in attempting to change tax laws and policies, but these basic arguments provide the rationales for how any tax policies can be justified. This part of the book is interesting, if you like economic theories, but it is also a bit on the dry side. If you did not already guess, there are numerous disagreements about the fundamentals of taxation and setting up an empirical analysis is far from easy. The authors then report on their efforts to test various hypotheses about taxation making use of their data base. They are very good at research design and seem very careful in their analyses.
A key insight from this book is that when the rich have been taxed the most heavily, it has taken place during violent mass conscription war situations when large numbers of citizens are drafted and put at risk in war. Under those circumstances, the politics of the times moves toward "conscripting capital" - through higher individual tax rates on the wealthy and windfall profits and capital levies on those business people who are exempted from serving directly and who may have earned windfall profits from the war when other citizens are dying from combat. It is key that such wartime situations provide the setting when efforts to tax the rich substantially can succeed politically. This is a reasonable claim and supported by the data analysis in the book. I had not tied tax policy over the century to the World Wars, and I learned something by understanding the linkage.
The overall results of the book are mixed and the overall argument is complex. The data analysis results will not provide much consolation to ideologists from the right or the left. Governments typically do not like to tax the rich heavily. There are lots of reasons for this, which a reader may or may not agree with, depending on their perspective. The old arguments from high tax rates are not as persuasive as they once were, but future tax policies are not set in stone either.
The book is worth working through. The analyses are accessible. The authors are not selling a particular position on taxation, in terms of desired policies. ... Or if they are, they are not selling it too hard to raise questions about the analysis. The intent seems to be that discussions of taxation of the rich, especially in the context of current debates on inequality, will benefit from some added clarity about the historical records for tax policies.
This is not the most exciting book and the style is academic and a bit dry. It is very interesting, however, and well worth reading if you are interested in taxes and elections.
no
December 17, 2022Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, K. Scheve and D. Stasavage, 2016.
The authors posit that only in the wake of bloodbaths of the working class--conscriptions in world wars--is steeply-progressive taxation politically possible.
Contrarily:
The Great Depression gave rise to FDR's New Deal and effective 77% tax rate on the top .01%. The U.S. was largely undamaged by WWI.
Fear of a Communist revolution led French elites to okay top tax rates of 60%.
The U.K. instituted progressive taxation and estate taxation after the political crisis of 1909-1911, before WWI.
Other major setbacks to the privileged elites that had nothing to do with conscription or world war:
Dissolution of British monasteries in 1530.
The French Revolution of 1789.
Agrarian reform in Ireland, 1890s.
Ending of wealth-proportionate voting rights, Sweden, 1911.
Progressive income tax began in Japan in 1904.
France increased the progressivity of its inheritance tax in 1910, to finance peasant and worker pensions.
So there's hope.
See Thomas Piketty, /Capital and Ideology/, p. 464.
The authors posit that only in the wake of bloodbaths of the working class--conscriptions in world wars--is steeply-progressive taxation politically possible.
Contrarily:
The Great Depression gave rise to FDR's New Deal and effective 77% tax rate on the top .01%. The U.S. was largely undamaged by WWI.
Fear of a Communist revolution led French elites to okay top tax rates of 60%.
The U.K. instituted progressive taxation and estate taxation after the political crisis of 1909-1911, before WWI.
Other major setbacks to the privileged elites that had nothing to do with conscription or world war:
Dissolution of British monasteries in 1530.
The French Revolution of 1789.
Agrarian reform in Ireland, 1890s.
Ending of wealth-proportionate voting rights, Sweden, 1911.
Progressive income tax began in Japan in 1904.
France increased the progressivity of its inheritance tax in 1910, to finance peasant and worker pensions.
So there's hope.
See Thomas Piketty, /Capital and Ideology/, p. 464.
February 5, 2021
Scheve y Stasavage escribieron un libro muy importante, que ayuda a entender porque la fiscalidad, en especial el pago de impuestos de los más ricos ha tenido el comportamiento que ha tenido en los últimos dos siglos.
El argumento de los autores es que los cambios en las tasas impositivas a los más ricos son dependientes de la economía política, de la presión que hace la sociedad para que se les cobren impuestos. Esta presión surge en lo general de un debate sobre lo que es o no es justo, que puede ser argumentos de equidad (que todos paguen lo mismo), de capacidad de pago (que se pague en función de la capacidad de pago) o compensatorios (que los ricos paguen porque se han beneficiado más de ciertas decisiones del estado).
Esta última categoría (la compensatoria) es la que resulta más relevante, sea porque las personas en la parte media y baja de la distribución pagan más impuestos indirectos (impuestos al consumo como el IVA) y por lo tanto lo justo sería que los ricos paguen más impuestos al ingreso o a la riqueza, o porque los ricos obtuvieron su fortuna por decisiones del Estado (como puede ser una privatización de activos públicos, concesiones, exenciones fiscales, etc).
El aporte de este libro entonces es poner sobre la mesa la que es quizá la gran pieza faltante en el rompecabezas de que hace falta para tener sistemas fiscales más progresivos, esto es que la sociedad lo reclame como una forma de compensación.
Además de lo anterior, el libro a mi parecer aporta X cosas:
1) El análisis histórico de los cambios fiscales, utilizando una buena mezcla de análisis narrativo con fuentes históricas y econométrico (haciendo diferencia en diferencias).
2) Le da un golpe duro a la idea de que los estados fiscales del siglo XX son hijos de los procesos de democratización, el sufragio universal parece tener poco o nulo efecto en los cambios impositivos.
3) Le da un duro golpe a la idea de que los gobiernos de izquierda por default producen cambios impositivos. No es el caso, gobiernos de izquierda, a pesar de tener una preferencia natural hacia impuestos más altos sobre todo a la riqueza, no son tan diferentes de gobierno de derecha al momento de introducir mayores impuestos, esto se debe a que los impuestos parecen responder más de una exigencia de la sociedad al gobierno.
4) Tiene una pequeña discusión sobre el rol de la tecnología militar en la estructura económica de los países y por ende en su fiscalidad. El uso del ejemplo del estribo como alteración radical en la estructura medieval (la tesis de Lynn White) tiene mucho sentido.
5) La importancia de la movilización total (surgida en las guerras Napoleónicas y las guerras mundiales ) como motor de argumentos de compensación, ya que la población en general sufría los estragos (luchaba en los ejércitos, sufría las repercusiones sociales y económicas de la guerra) mientras que los ricos lo hacían en menor escala (escapaban el servicio militar, lucraban con las oportunidades que traía la guerra, etc). Esto es particularmente importante en el contexto actual donde ese tipo de movilización ya no sucede porque las guerras son de menor escala y porque la tecnología ha cambiado como se pelean (con menos hombres).
Es un libro muy recomendable cuyas aportaciones se alimentan de investigación en varios campos y con gran relevancia en nuestro tiempo. Quizá la pandemia de Covid-19 que vivimos hoy y su totalidad como eventos e gran (in)movilización es un accidente histórico que nos presenta con una breve ventana de oportunidad para pensar en nuevos argumentos compensatorios y propiciar los cambios que necesitamos para ser sociedades más igualitarias y más prosperas.
El argumento de los autores es que los cambios en las tasas impositivas a los más ricos son dependientes de la economía política, de la presión que hace la sociedad para que se les cobren impuestos. Esta presión surge en lo general de un debate sobre lo que es o no es justo, que puede ser argumentos de equidad (que todos paguen lo mismo), de capacidad de pago (que se pague en función de la capacidad de pago) o compensatorios (que los ricos paguen porque se han beneficiado más de ciertas decisiones del estado).
Esta última categoría (la compensatoria) es la que resulta más relevante, sea porque las personas en la parte media y baja de la distribución pagan más impuestos indirectos (impuestos al consumo como el IVA) y por lo tanto lo justo sería que los ricos paguen más impuestos al ingreso o a la riqueza, o porque los ricos obtuvieron su fortuna por decisiones del Estado (como puede ser una privatización de activos públicos, concesiones, exenciones fiscales, etc).
El aporte de este libro entonces es poner sobre la mesa la que es quizá la gran pieza faltante en el rompecabezas de que hace falta para tener sistemas fiscales más progresivos, esto es que la sociedad lo reclame como una forma de compensación.
Además de lo anterior, el libro a mi parecer aporta X cosas:
1) El análisis histórico de los cambios fiscales, utilizando una buena mezcla de análisis narrativo con fuentes históricas y econométrico (haciendo diferencia en diferencias).
2) Le da un golpe duro a la idea de que los estados fiscales del siglo XX son hijos de los procesos de democratización, el sufragio universal parece tener poco o nulo efecto en los cambios impositivos.
3) Le da un duro golpe a la idea de que los gobiernos de izquierda por default producen cambios impositivos. No es el caso, gobiernos de izquierda, a pesar de tener una preferencia natural hacia impuestos más altos sobre todo a la riqueza, no son tan diferentes de gobierno de derecha al momento de introducir mayores impuestos, esto se debe a que los impuestos parecen responder más de una exigencia de la sociedad al gobierno.
4) Tiene una pequeña discusión sobre el rol de la tecnología militar en la estructura económica de los países y por ende en su fiscalidad. El uso del ejemplo del estribo como alteración radical en la estructura medieval (la tesis de Lynn White) tiene mucho sentido.
5) La importancia de la movilización total (surgida en las guerras Napoleónicas y las guerras mundiales ) como motor de argumentos de compensación, ya que la población en general sufría los estragos (luchaba en los ejércitos, sufría las repercusiones sociales y económicas de la guerra) mientras que los ricos lo hacían en menor escala (escapaban el servicio militar, lucraban con las oportunidades que traía la guerra, etc). Esto es particularmente importante en el contexto actual donde ese tipo de movilización ya no sucede porque las guerras son de menor escala y porque la tecnología ha cambiado como se pelean (con menos hombres).
Es un libro muy recomendable cuyas aportaciones se alimentan de investigación en varios campos y con gran relevancia en nuestro tiempo. Quizá la pandemia de Covid-19 que vivimos hoy y su totalidad como eventos e gran (in)movilización es un accidente histórico que nos presenta con una breve ventana de oportunidad para pensar en nuevos argumentos compensatorios y propiciar los cambios que necesitamos para ser sociedades más igualitarias y más prosperas.
October 13, 2018
An interesting account of the history of taxing the rich and why attempts to tax the rich much higher than those who are not rich have been tied to general mobilization for war in the 20th C. It gives the major arguments for higher taxes for the rich and discusses which ones have historically gotten more traction and why the common arguments often fail to garner significant support.
As an audio book this was very hard to follow in places because of the reliance on graphs and tables of data.
As an audio book this was very hard to follow in places because of the reliance on graphs and tables of data.
March 11, 2022
Excellent book, that highlights the merit of combining political science & economics. The great thing about political economy / comparative politics writing is the tradition of forwarding one clear and concise argument. The overall argument of the book is - contrary to convential models of redistribution - that increased taxes on the rich are driven by war-time efforts, where the rich don't participate in the fighting, why they contribute to the war-effort with their fortune.
Just needed more on property taxation - still underrated!
Just needed more on property taxation - still underrated!
December 12, 2016
Taxes are a charged subject, even more so perhaps when they concern the rich. When you ask people whether the rich should pay more taxes, you usually get either a resounding no or a convinced yet, depending on how much money they have in their bank account. Either way, governments are usually reluctant to tax the rich. Why?
In this book, Scheve and Stasavage explore the way governments have taxed the rich in the US and Europe over the past two centuries. They examine all the different arguments advanced throughout this time for taxing the rich, including whether the tax burden should be shared equally, be proportional to your ability to pay or levied more highly on those who have more to compensate those who have less. The author don't provide a clear answer to all these questions, unbiasedly giving the pros and cons of his choice and letting the reader make up his or her mind about it.
Everyone will no doubt have a different opinion on the subject but what's certain is that taxes have been levied more heavily on the rich during times of mass conscriptions, such as World Wars I and II. That's because during these tragic times when the rest of the population is sent to fight and, often, die, it's easier to raise taxes on the principle of "conscripting capital", forcing those rich people who have been exempted from active military services to fork out more money and thus contribute in their own way to the war effort.
Overall, the whole analysis on taxation is very fascinating and provides some great food for thought to anyone interested in the topic. My only problem was that the writing style was very dry. The topic itself tends to be dry on its own, but I wish the author had made more of an effort to keep the tone more engaging and colloquial. I understand that's hard for academics to do, but it helps a lot in making their works more accessible to the general public.
In this book, Scheve and Stasavage explore the way governments have taxed the rich in the US and Europe over the past two centuries. They examine all the different arguments advanced throughout this time for taxing the rich, including whether the tax burden should be shared equally, be proportional to your ability to pay or levied more highly on those who have more to compensate those who have less. The author don't provide a clear answer to all these questions, unbiasedly giving the pros and cons of his choice and letting the reader make up his or her mind about it.
Everyone will no doubt have a different opinion on the subject but what's certain is that taxes have been levied more heavily on the rich during times of mass conscriptions, such as World Wars I and II. That's because during these tragic times when the rest of the population is sent to fight and, often, die, it's easier to raise taxes on the principle of "conscripting capital", forcing those rich people who have been exempted from active military services to fork out more money and thus contribute in their own way to the war effort.
Overall, the whole analysis on taxation is very fascinating and provides some great food for thought to anyone interested in the topic. My only problem was that the writing style was very dry. The topic itself tends to be dry on its own, but I wish the author had made more of an effort to keep the tone more engaging and colloquial. I understand that's hard for academics to do, but it helps a lot in making their works more accessible to the general public.
August 28, 2016
Se trata de un excelente resumen de la investigación académica de los autores (y de otros investigadores) sobre los determinantes de las tasas impositivas con las que se grava a las personas de mayores ingresos en una sociedad. La investigación se basa en una sólida base de estudios empíricos (primordialmente estudios de diferencias en diferencias) y tiene como pregunta de investigación identificar el principal determinante del nivel de las tasas impositivas para los más ricos en el siglo XX en un conjunto de países desarrollados.
La hipótesis de los autores es que el principal determinante del nivel de las tasas impositivas observadas por los más ricos no es el nivel de desigualdad en una sociedad, ni una expansión de la democracia, ni el grado de captura de las instituciones por las élites; el principal determinante es la si existen los elementos que sostengan un argumento de impuestos compensatorios. Es decir, que las condiciones sean tales que, debido a la acción del Estado, un porcentaje amplio de la población tenga que cargar con una mayor parte del costo de dicha acción que lo que hacen las élites. Esas condiciones son las que se observaban al final de las guerras mundiales (donde la mayor parte de la población se sacrificó, mientras los más ricos no lo hacían o incluso se beneficiaban), momento en el cual se instituyeron las altas tasas observadas en el siglo XX. Conforme esas condiciones desaparecieron o se fueron olvidando, las tasas impositivas fueron disminuyendo.
El libro es indispensable para tofos los interesados en temas fiscales y de economía política.
La hipótesis de los autores es que el principal determinante del nivel de las tasas impositivas observadas por los más ricos no es el nivel de desigualdad en una sociedad, ni una expansión de la democracia, ni el grado de captura de las instituciones por las élites; el principal determinante es la si existen los elementos que sostengan un argumento de impuestos compensatorios. Es decir, que las condiciones sean tales que, debido a la acción del Estado, un porcentaje amplio de la población tenga que cargar con una mayor parte del costo de dicha acción que lo que hacen las élites. Esas condiciones son las que se observaban al final de las guerras mundiales (donde la mayor parte de la población se sacrificó, mientras los más ricos no lo hacían o incluso se beneficiaban), momento en el cual se instituyeron las altas tasas observadas en el siglo XX. Conforme esas condiciones desaparecieron o se fueron olvidando, las tasas impositivas fueron disminuyendo.
El libro es indispensable para tofos los interesados en temas fiscales y de economía política.
March 7, 2021
Muy buen libro sobre por qué existen impuestos a los ricos. Igualdad y habilidad de pago son las razones más mencionadas, pero la más importante es compensación. Esto fue importante en el periodo de guerras mundiales, por lo que ahora ya no es tan utilizado, aunque debería. Una muy buena reflexión sobre el tema.
March 22, 2025
Why do governments tax the rich? Why were top marginal tax rates higher in the mid-20th century than they are now? This book tries to answer those questions. The core thesis of the book is presented on page 3: "Societies tax the rich when people believe that the state has privileged the wealthy, and so fair compensation demands that the rich be taxed more heavily than the rest."
The authors then proceed to provide a history of tax policy (focused mostly on the US, Canada, the UK, and France), along with ideas on how the tax burden should be distributed, from the beginning of the 19th century up to the present day.
The book's core findings are the following:
The birth of a modern banking system made it easier to tax people.
Large increases in taxes paid by the rich (on income, inheritance, and also capital levies) occurred mostly after the World Wars. They were seen as a way to compensate the masses, who had been mobilized, rather than the wealthy.
Mass armies emerged with the widespread use of railroads and declined with the growing precision of aircraft.
The tax reforms designed as compensation sharply increased the progressivity of tax systems (for example, in the UK in 1941, including indirect taxes, the net tax rate averaged around 19% for those earning less than £100 and over 90% for those earning more than £50,000).
According to the authors, the fact that the rich were taxed so heavily did not depend on the government's need for more revenue; since, before the second half of the 20th century, most people were exempt from income tax, governments could have raised the same amount of revenue by applying a flat rate. In the case of the UK, the authors show, in Part 3.6, that before the war most debates on income tax focused on "equal treatment" and "ability to pay," but then shifted to a "compensatory" argument after WWI broke out.
In Part 3.8, the authors show how, after 1945, there was not the widespread consensus on high taxation of the rich that we might typically imagine; for example, Conservatives in the UK were already opposing high taxes as early as 1950. The authors also claim that globalization did not play a major role in the decline of top tax rates, as capital flows had been liberalized much earlier.
Right now, according to the authors, taxes on the rich are not rising, despite growing inequality, because the public is not willing to increase taxes on them. As evidence, at the end of the book, they present a poll asking a sample of US citizens what their preferred top marginal tax rate for the top 1% would be: the answer hovered around 30% (much lower than the actual 39.6%).
I found the book very interesting and compelling, as it made me reconsider some of my views. I used to believe that taxes on the rich had soared due to widespread fear of socialism and later declined because of globalization and arguments about 'economic efficiency.' However, in light of the war in Ukraine, the book's core claim does not entirely hold up; Ukraine, which mobilized every soldier over the age of 25, did increase capital levies but did not abandon its flat tax system.
Despite this, I recommend it to anyone curious about the evolution of tax policy.
The authors then proceed to provide a history of tax policy (focused mostly on the US, Canada, the UK, and France), along with ideas on how the tax burden should be distributed, from the beginning of the 19th century up to the present day.
The book's core findings are the following:
The birth of a modern banking system made it easier to tax people.
Large increases in taxes paid by the rich (on income, inheritance, and also capital levies) occurred mostly after the World Wars. They were seen as a way to compensate the masses, who had been mobilized, rather than the wealthy.
Mass armies emerged with the widespread use of railroads and declined with the growing precision of aircraft.
The tax reforms designed as compensation sharply increased the progressivity of tax systems (for example, in the UK in 1941, including indirect taxes, the net tax rate averaged around 19% for those earning less than £100 and over 90% for those earning more than £50,000).
According to the authors, the fact that the rich were taxed so heavily did not depend on the government's need for more revenue; since, before the second half of the 20th century, most people were exempt from income tax, governments could have raised the same amount of revenue by applying a flat rate. In the case of the UK, the authors show, in Part 3.6, that before the war most debates on income tax focused on "equal treatment" and "ability to pay," but then shifted to a "compensatory" argument after WWI broke out.
In Part 3.8, the authors show how, after 1945, there was not the widespread consensus on high taxation of the rich that we might typically imagine; for example, Conservatives in the UK were already opposing high taxes as early as 1950. The authors also claim that globalization did not play a major role in the decline of top tax rates, as capital flows had been liberalized much earlier.
Right now, according to the authors, taxes on the rich are not rising, despite growing inequality, because the public is not willing to increase taxes on them. As evidence, at the end of the book, they present a poll asking a sample of US citizens what their preferred top marginal tax rate for the top 1% would be: the answer hovered around 30% (much lower than the actual 39.6%).
I found the book very interesting and compelling, as it made me reconsider some of my views. I used to believe that taxes on the rich had soared due to widespread fear of socialism and later declined because of globalization and arguments about 'economic efficiency.' However, in light of the war in Ukraine, the book's core claim does not entirely hold up; Ukraine, which mobilized every soldier over the age of 25, did increase capital levies but did not abandon its flat tax system.
Despite this, I recommend it to anyone curious about the evolution of tax policy.
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April 14, 2017336.2 S328 2016
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