Political regimes and taxation: do democratic rule and regime stability count?

The chapter provides a literature review over the academic debates that link taxation to political regime type and political regime stability. It parts from the assumption that tax systems are expressions of a fiscal contract that is based on a specific institutional set up which interacts with the politics of taxation. In particular, the chapter (i) summarizes academic debates on the impact of political regime type on levels of revenue collection and the composition of tax systems; (ii) discusses the relationship between regime stability and taxation over time, and (iii) asks whether certain types of taxation or changes in revenue collection promote regime change, in particular democratization. It is possible to identify a large number of linkages between taxation and political regimes, both in theory and in empirical research. However, the academic debate is faced with manifold problems of endogeneity, making it difficult to derive general conclusions on the nature of this relationship.