Skip to main content

Income taxation and the validity of state capacity indicators

  • Melissa Ziegler Rogers (a1) and Nicholas Weller (a2)

State capacity is a key concept for research in public policy and political science. Despite its importance, there is no broadly accepted measure of state capacity in the existing literature, and frequently used measures of capacity have not been examined for their validity. We begin with an explicit definition of state capacity – the state's ability to implement public policy – and connect this definition to a measurable outcome of state capacity – the state's taxation of income. We show that this measure, income taxes as a percentage of total tax revenue, is a useful indicator of state capacity and meets higher standards of measurement validity than other tax-based indicators. We also compare our measure to the most common existing indicators of state capacity to show that income taxation is a better theoretical and statistical measure of states’ effectiveness in policy implementation.

Hide All
Adcock R. Collier R. (2001) Measurement Validity: A Shared Standard for Quantitative and Qualitative Research. American Political Science Review 95(3): 529546.
Aizenman J. Jinjarak Y. (2009) Globalisation and Developing Countries: A Shrinking Tax Base? Journal of Development Studies 45(5): 653671.
Arbetman M. Kugler J. (1997) Political Capacity and Economic Behavior. Boulder, CO: Westview Press.
Atkinson A. B. Stiglitz J. (1975) The Design of Tax Structure: Direct Versus Indirect Taxation. Journal of Public Economics 6(1–2): 5575.
Bergman M. S. (2003) Tax Reforms and Tax Compliance: The Divergent Paths of Chile and Argentina. Journal of Latin American Studies 35(3): 593624.
Berry W. D., Ringquist E. J., Fording R. C. Hanson R. L. (1998) Measuring Citizen and Government Ideology in the American States, 1960–93. American Journal of Political Science 42: 327348.
Besley T. Persson T. (2009) The Origins of State Capacity: Property Rights, Taxation, and Politics. American Economic Review 99(4): 12181244.
Bird R. (1992) Tax Reform in Latin America: A Review of Some Recent Experiences. Latin American Research Review 27(1): 736.
Bird R. Zolt E. (2005) Redistribution Via Taxation: The Limited Role of the Personal Income Tax in Developing Countries. UCLA Law Review 52(6): 16271696.
Bird R. M. Gendron P. (2006) Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries? Bulletin for International Taxation 60(7): 287296.
Bollen K. (1980) Issues in the Comparative Measurement of Political Democracy. American Sociological Review 45: 370390.
Brunei Economic Development Board. (accessed 17 October 2012).
Carpenter D. (2001) The Forging of Bureaucratic Autonomy: Reputations, Networks and Policy Innovation in Executive Agencies, 1862–1928. Princeton, NJ: Princeton University Press.
Central Intelligence Agency. World Factbook. Online access 17, October 2012.
Chaudhry K. A. (1997) The Price of Wealth: Economies and Institutions in the Middle East. Ithaca, NY: Cornell University Press.
Cheibub J. A. (1998) Political Regimes and the Extractive Capacity of Governments: Taxation in Democracies and Dictatorships. World Politics 50: 349376.
Di John J. (2006). The political economy of taxation and tax reform in developing countries (No. 2006/74). Research Paper, UNU-WIDER, United Nations University.
Evans P. B. (1995) Embedded Autonomy: States and Industrial Transformation (p. 12). Princeton, NJ: Princeton University Press.
Farazmand A. (2009) Building Administrative Capacity for the Age of Rapid Globalization: A Modest Prescription for the Twenty-First Century. Public Administration Review 69(6): 10071020.
Grindle M. S. (1996) Challenging the State: Crisis and Innovation in Latin America and Africa. Cambridge: Cambridge University Press.
Haggard S. (1990) Pathways from the Periphery: The Politics of Growth in Newly Industrializing Countries. Ithaca, NY: Cornell University Press.
Hollyer J., Rosendorff B. P. Vreeland J. (2011) Democracy and Transparency. The Journal of Politics 73(4): 11911205.
International Monetary Fund (2012) Government Finance Statistics, CD Access.
Johnson C. (1982) MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975. Stanford, CA: Stanford University Press.
Kaufmann D., Kraay A., Mastruzzi M. (2009) Governance Matters VIII: Aggregate and Individual Governance Indicators, 1996–2008. World Bank Policy Research Working Paper (4978).
Kettl D. (1997) Global Revolution in Public Management: Driving Themes, Missing Links. Journal of Policy Analysis and Management 16(3): 446462.
Knack S. (2006) Measuring Corruption in Eastern Europe and Central Asia: A Critique of Cross-Country Indicators. World Bank Policy Research Working Paper (3968).
Levi M. (1988) Of Rule and Revenue. Berkeley, CA: University of California Press.
Lieberman E. S. (2004) Taxation Data as Indicators of State-Society Relations: Possibilities and Pitfalls in Cross-National Research. Studies in Comparative International Development 36(4): 89115.
Mann M. (1993) The Sources of Social Power. Cambridge: Cambridge University Press.
Mead T. (1996) Barriers to Local Government Capacity in Nigeria. American Review of Public Administration 26(2): 159173.
Migdal J. (1988) Strong Societies and Weak States: State-Society Relations and State Capabilities in the Third World. Princeton, NJ: Princeton University Press.
Munck G. Verkuilen J. (2001) Conceptualizing and Measuring Democracy. Comparative Political Studies 35(1): 534.
Musgrave R. A. (1969) Cost-Benefit Analysis and the Theory of Public Finance. Journal of Economic Literature 7(3): 797806.
North D. (1981) Structure and Change in Economic History. New York, NJ: W.W. Norton and Company.
Organski A. F. K. Kugler J. (1980) The War Ledger. Chicago, IL: University of Chicago Press.
Perry J. L. (1996) Measuring Public Service Motivation: An Assessment of Construct Reliability and Validity. Journal of Public Administration Research and Theory 6(1): 522.
Peters B. G. (1991) The Politics of Taxation: A Comparative Perspective. Cambridge, MA: Blackwell Press.
Political Risk Services Group (2008) International Country Risk Guide.
Poole K. Rosenthal H. (1985) A Spatial Model for Legislative Voting. American Journal of Political Science 29(2): 357384.
Reeves M. M. (1982) Look Again at State Capacity: The Old Gray Mare Ain't What She Used to Be. The American Review of Public Administration 16(1): 7489.
Rogers M. (Submitted). Taxing with Dictators and Democrats: Regime Effects, Transfers, and Revenue in Argentina. Under review. Journal of Politics in Latin America.
Rose R. (1985) Maximizing Taxation While Minimizing Political Costs. Journal of Public Policy 5(3): 289320.
Sartori G. (1970) Concept Misinformation in Comparative Politics. American Political Science Review LXIV (4): 10331053.
Shadish W., Cook T. D. Campbell D. (2002) Experimental and Quasi-Experimental Designs for Generalized Causal Inference. New York, NY: Houghton Mifflin Publishing.
Skocpol T. (1982) State Capacity and Economic Intervention in the Early New Deal. Political Science Quarterly 97(2): 255278.
Slemrod J. (1990) Optimal Taxation and Optimal Tax Systems. The Journal of Economic Perspectives 4(1): 157178.
Slemrod J. (2007) Cheating Ourselves: The Economics of Tax Evasion. The Journal of Economic Perspectives 21(1): 2548.
Soifer H. (2008) State Infrastructural Power: Approaches to Conceptualization and Measurement. Studies in Comparative International Development (43): 231251.
Staronova K. (2010) Regulatory Impact Assessment: Formal Institutionalization and Practice. Journal of Public Policy 30(1): 117136.
Steinmo S. (1996) Taxation and Democracy: Swedish, British and American Approaches to Financing the Modern State. New Haven, CT: Yale University Press.
Tanzi V (1991) Tax Reform in Economies in Transition: A Brief Introduction to the Main Issues. IMF Working Paper (91/23).
Tanzi V. Zee H. (2004) Tax Policy for Developing Countries (Vol. 27). Washington, DC: International Monetary Fund.
Therkildsen O. (2000) Comparative Studies of Relevance to Resource Mobilization and Democratization in African Countries: A Critical Review. Paper presented at the conference The State Under Pressure, The Norwegian Association for Development Research, Bergen, 5–6 October.
Tilly C. (1978) From Mobilization to Revolution. Reading, MA: Addison-Wesley.
Tilly C. (1992) Coercion, Capital and European States, AD 990–1990. Cambridge, MA: Blackwell Press.
Transparency International. (2008) Corruption Perceptions Index.
Trochim W. Donnelly J. (2007) Research Methods Knowledge Base. Cincinnati, OH: Atomic Dog Publishing.
Tsao K. K. (2009) Building Administrative Capacity: Lessons from China. Public Administrative Review 69(6): 10211024.
Weyland K. (1998) From Leviathan to Gulliver? The Decline of the Developmental State in Brazil. Governance 11(1): 5175.
World Bank. (2000) Anticorruption in Transition: A Contribution to the Policy Debate. Geneva: World Bank.
World Bank (2008) EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS). Geneva: World Bank.
World Bank (2012) World Development Indicators. Geneva: World Bank.
Recommend this journal

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

Journal of Public Policy
  • ISSN: 0143-814X
  • EISSN: 1469-7815
  • URL: /core/journals/journal-of-public-policy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Type Description Title
Supplementary Materials

Rogers and Weller Supplementary Material

 Word (17 KB)
17 KB


Altmetric attention score

Full text views

Total number of HTML views: 1
Total number of PDF views: 72 *
Loading metrics...

Abstract views

Total abstract views: 262 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 18th November 2017. This data will be updated every 24 hours.