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2 - Tax policy in an era of internationalization: an assessment of a conditional diffusion model of the spread of neoliberalism

Published online by Cambridge University Press:  04 August 2010

By
Duane Swank
Edited by
Beth A. Simmons ,
Frank Dobbin  and
Geoffrey Garrett
Duane Swank
Affiliation:
Professor of Political Science, Marquette University
Beth A. Simmons
Affiliation:
Harvard University, Massachusetts
Frank Dobbin
Affiliation:
Harvard University, Massachusetts
Geoffrey Garrett
Affiliation:
University of Southern California
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Summary

Neoliberal reforms in public policies and economic institutions proliferated across the developed democracies and the globe in the latter decades of the twentieth century. National structures of taxation have not been immune to neoliberalism. Beginning in the early 1980s, policymakers throughout the Organization for Economic Cooperation and Development (OECD) significantly altered the content of tax policies. The relative priority accorded equity and growth goals, the use of investment and behavioral incentives, and the level of tax rates were all notably changed: marginal income and corporate profits tax rates were scaled back, the number of brackets were cut and inflation-indexed, and tax-based investment incentives were eliminated or reduced to broaden the tax base. Why have nearly all developed nations enacted this set of market-conforming tax policies?

To answer this question, I build on my recent work on the determinants of change in tax policy in the developed democracies and explore the dynamics of diffusion of the neoliberal tax policy paradigm in the area of capital taxation. While I assess general competition, policy learning, and social emulation models of tax policy diffusion, I argue that the highly visible 1986 market-conforming tax reform in the United States should be especially important in promoting diffusion. Specifically, I argue that (asymmetric) competition for mobile assets associated with US reforms significantly influences national policy choices in other polities.

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Chapter
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The Global Diffusion of Markets and Democracy , pp. 64 - 103
Publisher: Cambridge University Press
Print publication year: 2008

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