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The divergent paths of tax development during different waves of democratization

Published online by Cambridge University Press:  29 August 2018

Junko Kato  and
Miki Toyofuku
Junko Kato
Affiliation:
The University of Tokyo, Tokyo, Japan
Miki Toyofuku*
Affiliation:
Ochanomizu University, Tokyo, Japan
*
*Corresponding author. Email: toyofuku.miki@ocha.ac.jp
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Abstract

Taxation is a critical part of state power and has evolved with modernization. Although tax systems are expected to converge as countries achieve economic development, there are variations in the scale and structure of tax revenues. A recurring question is which tax dominates state financing in democracies. Some scholars associate mature democracies with progressive income taxation, and others find that democracies have relied on regressive taxation on consumption. Learning from the history of tax development, this paper illuminates that countries in different democratic waves followed divergent paths of tax development in the process of modernization. The first and second wave democratizers established progressive income taxation in the nineteenth and early twentieth centuries and continued to rely on it. On the other hand, newly democratized countries came to rely heavily on the value-added tax, which was innovated in the mid-twentieth century, shortly before the beginning of the third wave of democratization. By shedding new light on the linkage between the development of modern taxation and the waves of democratization, the study demonstrates that the trajectory of modernization has shaped different tax systems.

Type
Taxation and Welfare Since the Third Wave of Democratization
Information
Japanese Journal of Political Science , Volume 19 , Issue 3 , September 2018 , pp. 333 - 352
Copyright
Copyright © Cambridge University Press 2018 

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