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Making and Breaking Tax Systems

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  • Timothy Besley

    (London School of Economics)

Abstract

'The fiscal history of a people is above all an essential part of its general history. An enormous influence on the fate of nations emanates from the economic bleeding which the needs of the state necessitates, and from the use to which the results are put.' Joseph Schumpeter, “The Crisis of the Tax State”, 1917/18, page 100. The above quote is from an article by Schumpeter which is often thought of as one of the founding articles in the field of fiscal sociology. I am fairly certain that many economists, even those who work in the field of public finance, have not engaged very much with the issues that Schumpeter raises here. It is worth bearing in mind he wrote the words above in an era when it was common for governments of the most prosperous countries to raise around 10 per cent of GDP in taxes. Even then, the question that pre-occupied Schumpeter was whether and how revenues on that scale were sustainable. This requires a proper appreciation of the economic, social and political forces that make tax raising possible.

Suggested Citation

  • Timothy Besley, 2013. "Making and Breaking Tax Systems," The Economic and Social Review, Economic and Social Studies, vol. 44(3), pages 297-321.
  • Handle: RePEc:eso:journl:v:44:y:2013:i:3:p:297-321
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    References listed on IDEAS

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    1. Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-1244, September.
    2. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    3. Dincecco,Mark, 2013. "Political Transformations and Public Finances," Cambridge Books, Cambridge University Press, number 9781107617759.
    4. Roger Gordon, 2011. "Commentary on Tax by Design: The Mirrlees Review," Fiscal Studies, Institute for Fiscal Studies, vol. 32(3), pages 395-414, September.
    5. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2016. "Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries," Economica, London School of Economics and Political Science, vol. 83(330), pages 219-246, April.
    6. Baunsgaard, Thomas & Keen, Michael, 2010. "Tax revenue and (or?) trade liberalization," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 563-577, October.
    7. Lee, Young & Gordon, Roger H., 2005. "Tax structure and economic growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1027-1043, June.
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    Keywords

    taxation; fiscal sociology;

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