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No direct taxation without new elite representation: Industrialization and the domestic politics of taxation
Author(s) -
EMMENEGGER PATRICK,
LEEMANN LUCAS,
WALTER ANDRÉ
Publication year - 2021
Publication title -
european journal of political research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.267
H-Index - 95
eISSN - 1475-6765
pISSN - 0304-4130
DOI - 10.1111/1475-6765.12410
Subject(s) - elite , politics , industrialisation , context (archaeology) , competition (biology) , economics , state (computer science) , democracy , public finance , political economy , political science , economic system , development economics , market economy , macroeconomics , law , paleontology , ecology , algorithm , computer science , biology
The nineteenth century marked the founding period of modern public finance. We examine the domestic and non‐war related determinants of direct taxation in this early democratic period and in a state building context. We argue that the reasons for the expansion of direct taxation can be found in the political competition between different elite groups in the context of industrialization. Systematically differentiating between economic and political arenas, we show that intra‐elite competition in industrializing economies leads to higher levels of direct taxation only if the new economic elites are able to translate their economic power into the political arena, either through the representative system or by extra‐parliamentary means. In addition, we demonstrate that these processes are directly linked to public investments in policy areas related to the interests of new economic elites such as public education. Our analysis is based on novel subnational data from the period 1850 to 1910, enabling us to concentrate on the domestic determinants of direct taxation.