Why Don’t We Tax the Rich? Inequality, Legislative Malapportionment, and Personal Income Taxation around the World
AbstractPersonal income taxation remains relatively low in many developing countries despite recent democratic advancement and rapid economic growth; this is hard to reconcile with standard political economy models of taxation. This paper argues that the details of political institutions help to explain these low levels of personal income taxation. In particular, legislative malapportionment enables rich elites to have 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4724.
Date of creation: Nov 2011
Date of revision:
Find related papers by JEL classification:
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-12-19 (Accounting & Auditing)
- NEP-ALL-2011-12-19 (All new papers)
- NEP-PBE-2011-12-19 (Public Economics)
- NEP-POL-2011-12-19 (Positive Political Economics)
- NEP-PUB-2011-12-19 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Scheve, Kenneth & Stasavage, David, 2006. "Religion and Preferences for Social Insurance," International Quarterly Journal of Political Science, now publishers, vol. 1(3), pages 255-286, July.
- Alessandro Lizzeri & Nicola Persico, .
""The Provision of Public Goods Under Alternative Electoral Incentives'',"
CARESS Working Papres
98-08, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Nicola Persico & Alessandro Lizzeri, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, vol. 91(1), pages 225-239, March.
- Alessro Lizzeri & Nicola Persico, . "The Provision of Public Goods Under Alternative Electoral Incentives," Penn CARESS Working Papers b96440ba0bfa06ca550ac40aa, Penn Economics Department.
- Gordon, Roger & Li, Wei, 2009.
"Tax structures in developing countries: Many puzzles and a possible explanation,"
Journal of Public Economics,
Elsevier, vol. 93(7-8), pages 855-866, August.
- Roger Gordon & Wei Li, 2005. "Tax Structure in Developing Countries: Many Puzzles and a Possible Explanation," NBER Working Papers 11267, National Bureau of Economic Research, Inc.
- Persson, Torsten & Roland, Gérard & Tabellini, Guido, 1997.
"Comparative Politics and Public Finance,"
CEPR Discussion Papers
1737, C.E.P.R. Discussion Papers.
- Persson, Torsten & Roland , Gérard & Tabellini, Guido, 1997. "Comparative Politics and Public Finance," Seminar Papers 633, Stockholm University, Institute for International Economic Studies.
- Torsten Persson & Gerard Roland & Guido Tabellini, . "Comparative Politics and Public Finance," Working Papers 114, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Persson, T. & Roland, G. & Tabellini, G., 1997. "Comparative Politics and Public Finance," Papers 633, Stockholm - International Economic Studies.
- Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, vol. 84(2), pages 755-776, November.
- Reinikka, Ritva & Svensson, Jakob, 2004. "The power of information : evidence from a newspaper campaign to reduce capture," Policy Research Working Paper Series 3239, The World Bank.
- Mario Mansour & Michael Keen, 2009. "Revenue Mobilization in Sub-Saharan Africa: Challenges from Globalization," IMF Working Papers 09/157, International Monetary Fund.
- Davide Ticchi & Andrea Vindigni, 2002.
Economics Working Papers
896, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2005.
- Trebbi, Francesco & Aghion, Philippe & Alesina, Alberto, 2008.
"Electoral Rules and Minority Representation in U.S. Cities,"
4551793, Harvard University Department of Economics.
- Francesco Trebbi & Philippe Aghion & Alberto Alesina, 2008. "Electoral Rules and Minority Representation in U.S. Cities," The Quarterly Journal of Economics, MIT Press, vol. 123(1), pages 325-357, 02.
- Trebbi, F. & Aghion, P. & Alesina, A., 2008. "Electoral rules and minority representation in U.S. cities," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
- Paul, Gilles Saint & Verdier, Thierry, 1996. "Inequality, redistribution and growth: A challenge to the conventional political economy approach," European Economic Review, Elsevier, vol. 40(3-5), pages 719-728, April.
- Keefer, Philip & Khemani, Stuti, 2003. "Democracy, public expenditures, and the poor," Policy Research Working Paper Series 3164, The World Bank.
- Dehejia, Rajeev & DeLeire, Thomas & Luttmer, Erzo F. P., 2005.
"Insuring Consumption and Happiness through Religious Organizations,"
Working Paper Series
rwp05-047, Harvard University, John F. Kennedy School of Government.
- Dehejia, Rajeev & DeLeire, Thomas & Luttmer, Erzo F.P., 2007. "Insuring consumption and happiness through religious organizations," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 259-279, February.
- Rajeev Dehejia & Thomas DeLeire & Erzo F.P. Luttmer, 2005. "Insuring Consumption and Happiness Through Religious Organizations," NBER Working Papers 11576, National Bureau of Economic Research, Inc.
- Mauricio Cárdenas & Didem Tuzemen, 2011. "Under-investment in state capacity: the role of inequality and political instability," Research Working Paper RWP 11-07, Federal Reserve Bank of Kansas City.
- Carlos Scartascini & Mariano Tommasi, 2009. "The Making of Policy: Institutionalized or Not?," Research Department Publications 4644, Inter-American Development Bank, Research Department.
- Casey B. Mulligan & Xavier Sala-i-Martin & Ricard Gil, 2003.
"Do Democracies Have Different Public Policies than Nondemocracies?,"
NBER Working Papers
10040, National Bureau of Economic Research, Inc.
- Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2004. "Do Democracies Have Different Public Policies than Nondemocracies?," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 51-74, Winter.
- Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2004. "Do democracies have different public policies than non-democracies?," Discussion Papers 0304-14, Columbia University, Department of Economics.
- Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December.
- Machado, Fabiana, 2011. "Inequality, Uncertainty, and Redistribution," MPRA Paper 35665, University Library of Munich, Germany.
- Klaus Deininger & Lyn Squire, 1996.
"A New Data Set Measuring Income Inequality,"
CEMA Working Papers
512, China Economics and Management Academy, Central University of Finance and Economics.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999.
"A Data Set on Income Distribution,"
CEMA Working Papers
575, China Economics and Management Academy, Central University of Finance and Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luis Daniel Martinez).
If references are entirely missing, you can add them using this form.