Skip to main content Accessibility help
×
×
Home

Democracy, War, and Wealth: Lessons from Two Centuries of Inheritance Taxation

  • KENNETH SCHEVE (a1) and DAVID STASAVAGE (a2)
Abstract

In this article we use an original data set to provide the first empirical analysis of the political economy of inherited wealth taxation that covers a significant number of countries and a long time frame (1816–2000). Our goal is to understand why, if inheritance taxes are often very old taxes, the implementation of inheritance tax rates significant enough to affect wealth inequality is a much more recent phenomenon. We hypothesize alternatively that significant taxation of inherited wealth depended on (1) the extension of the suffrage and (2) political conditions created by mass mobilization for war. Using a difference-in-differences framework for identification, we find little evidence for the suffrage hypothesis but very strong evidence for the mass mobilization hypothesis. Our study has implications for understanding the evolution of wealth inequality and the political conditions under which countries are likely to implement policies that significantly redistribute wealth and income.

Copyright
Corresponding author
Kenneth Scheve is Professor of Political Science, Yale University, Rosenkranz Hall, 115 Prospect Street, New Haven, CT 06520 (kenneth.scheve@yale.edu).
David Stasavage is Professor of Politics, New York University, 19 W. 4th Street, New York, NY 10012 (david.stasavage@nyu.edu).
References
Hide All
Acemoglu, Daron, and Robinson, James A.. 2000. “Why Did the West Extend the Franchise? Democracy, Inequality, and Growth in Historical Perspective.” Quarterly Journal of Economics 115 (4): 1167–99.
Acemoglu, Daron, and Robinson, James A.. 2006. Economic Origins of Dictatorship and Democracy. Cambridge: Cambridge University Press.
Acemoglu, Daron, and Robinson, James A.. 2008. “Persistence of Power, Elites, and Institutions.” American Economic Review. 98 (1): 267–93.
Angrist, Joshua, and Pischke, Jörn-Steffen. 2009. Mostly Harmless Econometrics. Princeton: Princeton University Press.
Arellano, Manuel, and Bond, Stephen. 1991. “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations.” Review of Economic Studies 58 (2): 277–97.
Atkinson, Anthony Barnes. 2007. “The Distribution of Top Incomes in the United Kingdom 1908–2000.” In Top Incomes over the Twentieth Century: A Contrast between Continental European and English-Speaking Countries, eds. Atkinson, Anthony and Piketty, Thomas. Oxford: Oxford University Press, 82140.
Bank, Steven, Stark, Kirk, and Thorndike, Joseph. 2008. War and Taxes. Washington, DC: Urban Institute Press.
Bartels, Larry. 2008. Unequal Democracy: The Political Economy of the New Gilded Age. Princeton: Princeton University Press.
Batchelder, Lily. 2008. “What Should Society Expect from Heirs? A Proposal for a Comprehensive Inheritance Tax.” NYU Law and Economics Research Paper No. 08–42. http://ssrn.com/abstract-127466 (accessed October 20, 2011).
Beckert, Jens. 2008. Inherited Wealth. Princeton: Princeton University Press.
Boix, Carles. 2003. Democracy and Redistribution. Cambridge: Cambridge University Press.
Boix, Carles, and Rosato, Sebastian. 2001. ‘A Complete Data Set of Political Regimes, 1800–1999’. Chicago: University of Chicago Department of Political Science.
Brownlee, Elliot. 2004. Federal Taxation in America: A Short History. New York: Cambridge University Press.
Caramani, Daniele. 2000. Elections in Western Europe since 1815: Electoral Results by Constituencies. London: Macmillan Reference.
Colley, Linda. 1994. “The Reach of the State, the Appeal of the Nation,” In An Imperial State at War: Britain from 1689 to 1815, 82140. ed. Stone, Lawrence. London: Routledge.
Crémer, Helmut, and Pestieau, Pierre. 2003. “Wealth Transfer Taxation: A Survey of the Theoretical Literature.” CESifo Working Paper Series No. 1061. http://ssrn.com/abstract-462441 (accessed October 20, 2011).
Croissant, Aurel. 2002. “Electoral Politics in South Korea.” In Electoral Politics in Southeast and East Asia, ed. Auriel Croissant. Bonn: Freidrich-Eibert-Stifung, 233–76.
Daunton, Martin. 2002. Just Taxes: The Politics of Taxation in Britain, 1914–1979. Cambridge, MA: Cambridge University Press.
Duff, David G. 2005. “The Abolition of Wealth Transfer Taxes: Lessons from Canada, Australia, and New Zealand.” Pittsburgh Tax Review 3 (72): 71120.
Flora, Peter, Frankfurt: campus. et al. 1983. State, Economy, and Society in Western Europe since 1815.
Graetz, Michael J., and Shapiro, Ian. 2005. Death by a Thousand Cuts. Princeton: Princeton University Press.
Griffin, Edward Geary. 1965. The Adoption of Universal Manhood Suffrage in Japan. New York: Columbia University Press.
Hayashida, Kazuhiro. 1967. Development of Election Law in Japan. Fukuoka City, Japan: Kyushu University.
Hicks, J.R., Hicks, U.K., and Rostas, L.. 1941. The Taxation of War Wealth. Oxford: Clarendon Press.
Johnston, Alexande 1965 The Inland Revenue. London: George Allen and Unwin.
Kaldor, Nicholas. 1963. “Will Underdeveloped Countries Learn to Tax?Foreign Affairs 41: 410–19.
Klinkner, Philip, and Smith, Rogers. 1999. The Unsteady March: The Rise and Decline of Racial Equality in America. Chicago: University of Chicago Press.
Kopczuk, Wojciech, and Saez, Emmanuel. 2004. “Top Wealth Shares in the United States, 1916–2000: Evidence from Estate Tax Returns.” National Tax Journal 57 (2): 445–48.
Lasswell, Harold. 1941. “The Garrison State.” American Journal of Sociology. 46: 455–68.
Levi, Margaret. 1997. Consent, Dissent, and Patriotism. Cambridge: Cambridge University Press.
Lindert, Peter. 2004. Growing Public: Social Spending and Economic Growth since the Eighteenth Century. New York: Cambridge University Press.
Mackie, Thomas T., and Rose, Richard. 1974. The International Almanac of Electoral History. London: Macmillan.
Mallett, Bernard, and George, Oswald. 1929. British Budgets, Second Series 1913–14 to 1920–21. London: Macmillan.
Marriot, J.A.R. [1910] 1926. Second Chambers: An Inductive Study in Political Science. Oxford: Clarendon Press.
Mitchell, B.R. 1988. British Historical Statistics. Cambridge: Cambridge University Press.
Mitchell, B.R. 2007. International Historical Statistics: Africa, Asia, and Oceania 1750–2005. Basingstoke: Palgrave Macmillan.
Officer, Lawrence. 2009. “What Was United Kingdom GDP Then? A Data Study.” University of Illinois at Chicago.
Pigou, Arthur. 1918. “A Special Levy to Discharge War Debt.” Economic Journal 28: 135–56.
Piketty, Thomas. 2001. Les hauts revenus en France au XX ème siècle. Paris: Grasset.
Piketty, Thomas, and Saez, Emmanuel. 2003. “Income Inequality in the United States.” Quarterly Journal of Economics 98 (1): 139.
Piketty, Thomas, Postel-Vinay, Gilles, and Rosenthal, Jean-Laurent. 2006. “Wealth Concentration in a Developing Economy: Paris and France, 1807–1994.” American Economic Review 96 (1): 236–56.
Poterba, James. 1998. Estate and Gift Taxes and Incentives for Inter Vivos Giving in the United States. NBER Working Article No. 6842.
Przeworski, Adam. 2008. “Conquered or Granted? A History of Suffrage Extensions.” British Journal of Political Science 39: 291321.
Przeworski, Adam, Alvarez, Michael, Cheibub, Jose Antonio, and Limongi, Fernando. 2000. Democracy and Development: Political Institutions and Well-being in the World, 1950–1990. New York: Cambridge University Press.
Roine, Jesper, and Waldenström, Daniel. 2009. “Wealth Concentration over the Path of Development: Sweden, 1873–2006.” Scandinavian Journal of Economics 111 (1): 151–87.
Scheve, Kenneth, and Stasavage, David. 2010. “The Conscription of Wealth: Mass Warfare and the Demand for Progressive Taxation.” International Organization 64 (Fall): 529–61.
Schoenblum, Jeffrey A. 1982. Multistate and Multinational Estate Planning, Vol. II. Boston: Little, Brown.
Seligman, Edwin. 1913. Essays in Taxation. New York: Macmillan.
Seligman, Edwin R.A. 1924. “Comparative Tax Burdens in the Twentieth Century.” Political Science Quarterly. 39: 106–46.
Shirras, G. Findlay, and Rostas, L.. 1943. The Burden of British Taxation. Cambridge: Cambridge University Press.
Shultz, William J. 1926. The Taxation of Inheritance. Boston: Houghton Mifflin.
Sidgwick, Henry. 1883. The Principles of Political Economy. London: Macmillan.
Skocpol, Theda. 1992. Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States. Cambridge, MA: Harvard University Press.
Soward, Alfred. 1919. The Taxation of Capital. London: Waterlow and Sons.
Ticchi, Davide, and Vindigni, Andrea. 2009. On Wars and Political Development: The Role of International Conflicts in the Democratization of the West. Princeton University Working Article.
Titmuss, Richard M. 1958. War and Social Policy. In Essays on the Welfare State, ed. Titmuss, R.. London: George Allen and Unwin, 7587.
Vording, Henk, and Ydema, Onno. 2009. “The Rise and Fall of Progressive Income Taxation in the Netherlands (1795–2001).” In Studies in the History of Tax Law, Vol. 3, ed. Tiley, John. Oxford: Hart Publishing, 255–79.
West, Max. 1908. The Inheritance Tax. 2nd ed.New York: Columbia University Press.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×
Type Description Title
PDF
Supplementary materials

Scheve supplementary materials
Appendix.pdf

 PDF (128 KB)
128 KB

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed