War, inequality, and taxation

Dalton C. Dorr and Adrian J. Shin

Economics and Politics, 2021, vol. 33, issue 2, 315-342

Abstract: Existing studies highlight the importance of the compensatory demand among the conscripted poor to explain why wars lead to income and inheritance tax hikes for the rich. We propose a more nuanced argument that war mobilization leads to a class conflict in which the poor want the rich to pay more taxes in exchange for conscription while the rich seek lower taxes because they expect war‐related losses of their wealth. Mass warfare imposes higher tax burdens on the rich only when elites lack economic resources to prevent such policies. Using a panel analysis of up to 18 countries from the late nineteenth century to the 2010s as well as a subnational analysis of Senate roll call votes on tax bills introduced between 1913 and 2008, we corroborate our argument that elites' share of national income conditions how war mobilization shapes the trajectories of tax regimes.

Date: 2021
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