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Published online by Cambridge University Press: 31 March 2021
A prominent line of research on electoral systems and income redistribution argues that proportional representation (PR) leads to tax-and-transfer policies that benefit the poor at the expense of the rich. This is because PR produces encompassing center-left coalitions that protect the poor and middle classes. Yet countries with PR electoral systems tend to rely heavily on consumption taxes and tax profits lightly, both of which are inconsistent with this expectation. Both policies are regressive and seem to benefit the rich at the expense of the poor. This article argues that PR electoral institutions, when combined with trichotomous multipartism, are not as hostile to the rich as commonly believed, and that it is important to understand how electoral and party systems interact with labor market institutions in order to explain the puzzling pattern of taxation that is observed. The author develops a theoretical model and evaluates its empirical implications for a world in which production has become multinational.