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Tax policy. POLI 352A. 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

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Tax policy l.jpg

Tax policy

POLI 352A


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Taxes: Extracting resources

  • Income

  • Consumption

  • Social insurance

  • Wealth

  • Corporation

  • Tax expenditures


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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


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Varieties of tax policy

  • United Kingdom

    • Unstable and incoherent




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U.S.: Fragmentation

  • Fragmented political authority

  • Interest groups: Opportunities for narrow demands

     Narrow organization of interests and demands

     Heavy tax rates but

    • Narrow tax expenditures

  • Weak parties, interest groups

     Hard to make social bargains

     Liberals reject consumption tax

    • Even though it could finance social spending


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    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


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    United Kingdom:Incoherence and instability

    • Centralized authority

      Power 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


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    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


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    Blame avoidance:Tax cutvisibility

    • 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


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    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


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    Debating policymaking regimes

    • Four policymaking regimes

      • Westminsters (Parliamentary, FPTP) pluralist interests

      • Parliamentary, PR, neo-corporatist interests

      • Presidential, weak parties, pluralist interests

      • -- 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


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