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Why Don't We Tax the Rich? Inequality, Legislative Malapportionment, and Personal Income Taxation around the World

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  • Ardanaz, Martín
  • Scartascini, Carlos

Abstract

This paper argues that the details of political institutions help explain the low levels of personal income taxation. In particular, legislative malapportionment enables rich elites to exercise disproportionate political influence. Because over-represented districts tend to be dominated by parties aligned with the elite, these groups can block legislative attempts to introduce progressive taxes. Using a sample of more than 50 countries (including 17 across Latin America) between 1990 and 2007, this paper finds that i) countries with historically more unequal distributions of wealth and income systematically present higher levels of legislative malapportionment, and ii) higher levels of malapportionment are associated with lower shares of personal income taxes in GDP. present higher levels of legislative malapportionment, and ii) higher levels of malapportionment are associated with lower shares of personal income taxes in GDP.

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  • Ardanaz, Martín & Scartascini, Carlos, 2011. "Why Don't We Tax the Rich? Inequality, Legislative Malapportionment, and Personal Income Taxation around the World," IDB Publications (Working Papers) 3821, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:3821
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    Cited by:

    1. Déborah Itriago, 2016. "Wielding Influence, Building Inequality: Capture of Tax Policies in Latin America and the Caribbean," Development, Palgrave Macmillan;Society for International Deveopment, vol. 59(1), pages 151-157, June.
    2. Mr. Alexander D Klemm & Ms. Li Liu & Mr. Victor Mylonas & Mr. Philippe Wingender, 2018. "Are Elasticities of Taxable Income Rising?," IMF Working Papers 2018/132, International Monetary Fund.
    3. Richard M. Bird & Eric M. Zolt, 2014. "Taxation and inequality in the Americas: Changing the fiscal contract?," Chapters, in: Richard M. Bird & Jorge Martinez-Vazquez (ed.), Taxation and Development: The Weakest Link?, chapter 7, pages 193-237, Edward Elgar Publishing.
    4. Stanley L. Winer, 2016. "The Political Economy of Taxation: Power, Structure, Redistribution," Carleton Economic Papers 16-15, Carleton University, Department of Economics.
    5. Tunçer, Ali Coşkun & Weller, Leonardo, 2022. "Democracy, autocracy, and sovereign debt: How polity influenced country risk on the peripheries of the global economy, 1870–1913," Explorations in Economic History, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    Personal income tax; Inequality; Malapportionment; Elite dominance;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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