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Politics and the Structural Dependence of the State in Democratic Capitalist Nations

Published online by Cambridge University Press:  02 September 2013

Duane Swank
Duane Swank*
Affiliation:
Marquette University
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Abstract

I explore empirically a central claim of the structural dependence thesis, namely, that capitalists' ability to disinvest fundamentally conditions policy choices in democratic capitalist systems. Utilizing time-series data for 16 affluent democracies from 1965 to 1984, I find that, indeed, low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis. Moreover, low rates of capital formation engender cuts in personal income taxes during periods of economic stress. However, I also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices. The responsiveness of corporate tax burdens to capital formation may, under some governments, be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies.

Type
Research Article
Information
American Political Science Review , Volume 86 , Issue 1 , March 1992 , pp. 38 - 54
Copyright
Copyright © American Political Science Association 1992 

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