Local Democracy and Taxation Types

• In Event: Taxes as Tools or Threat for Political Elites

Abstract

Conventional wisdom says that democracy and taxation are tightly linked. Foundational theories, such as the Meltzer-Richards model of redistribution, predict that expanding the pool of citizens that decide on taxation should increase the tax burden, especially on the rich. However, this dynamic has proven difficult to find empirically. In this paper, I fill this gap by leveraging the uneven extension of suffrage in historical Norwegian municipalities and a rich dataset on local taxation types and levels. I find that overall levels of tax extraction unaffected by democracy, but that the types of taxes collected are impacted by regime type. The results imply that where local economic elites are strong, they are able to use the extension of suffrage to increase the fiscal capacity of the local government, while avoiding being more heavily taxed themselves.

Author

• Tine N Paulsen, University of Southern California