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War mobilization or war destruction? The unequal rise of progressive taxation revisited


Haffert, Lukas (2019). War mobilization or war destruction? The unequal rise of progressive taxation revisited. The Review of International Organizations, 14(1):59-82.

Abstract

This paper sheds new light on the massive increase of progressive taxation in the first half of the twentieth century. Existing studies have explained this increase with the mass mobilization during the World Wars and the call for a fair sharing of the burdens of these wars. My analysis suggests that this effect was not uniform across mobilizing countries. Instead, the call for higher taxation of the rich was curbed by allocational concerns about capital rebuilding in those countries whose capital stock had been severely damaged during the war. Therefore, these countries increased progressive taxes much less. I find some evidence for this thesis in an analysis of top income and inheritance tax rates in 20 developed economies and a case study of tax policy debates in Germany after World War II. My finding has importance for the understanding of progressive taxation as well as for the understanding of tax policies more generally. It suggests that the two World Wars affected the development of tax systems not only through a distributional but also through an allocational channel.

Abstract

This paper sheds new light on the massive increase of progressive taxation in the first half of the twentieth century. Existing studies have explained this increase with the mass mobilization during the World Wars and the call for a fair sharing of the burdens of these wars. My analysis suggests that this effect was not uniform across mobilizing countries. Instead, the call for higher taxation of the rich was curbed by allocational concerns about capital rebuilding in those countries whose capital stock had been severely damaged during the war. Therefore, these countries increased progressive taxes much less. I find some evidence for this thesis in an analysis of top income and inheritance tax rates in 20 developed economies and a case study of tax policy debates in Germany after World War II. My finding has importance for the understanding of progressive taxation as well as for the understanding of tax policies more generally. It suggests that the two World Wars affected the development of tax systems not only through a distributional but also through an allocational channel.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Uncontrolled Keywords:organizational behavior and human resource management, taxation, fiscal policy, war, political economy, capital
Language:English
Date:March 2019
Deposited On:08 May 2019 13:42
Last Modified:25 Sep 2019 00:34
Publisher:Springer
ISSN:1559-7431
Additional Information:JEL classification: E22, E62, H20, N14, N44
OA Status:Closed
Publisher DOI:https://doi.org/10.1007/s11558-018-9300-0

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