Although the trajectory of Argentina’s tax burden has been more volatile than Brazil’s, today the countries share a similar level of taxation. This similarity reflects the fact that neither has experienced threats to private property profound enough to spur the rise of a powerful anti-statist bloc. The most significant redistributive reform wave in Argentine history occurred under Juan Perón (1946-1955), who mobilized workers and expanded the welfare state. However, like Getúlio Vargas, Perón spared private property and opposed socialism. As a result, he failed to provoke the formation of an anti-statist bloc capable of acting as an enduring constraint on public sector growth. Instead, he aggravated private sector divisions, strengthened labor and forged a broad populist electoral coalition. For decades, military intervention kept statists from wielding power in a sustained fashion. In addition, hyperinflation and the global ascendancy of neoliberalism pushed even a peronista president to adopt neoliberal reforms in the 1990s. Gradually, however, these constraints have fallen away, and the superiority of statist forces has come to be reflected in heavy taxation and social spending.

Although authorities have taken measures since the mid-2000s to contain tax burden growth, Brazil remains far more heavily taxed than Chile or Mexico. This chapter explains why. Contemporary analyses emphasize the 1998 constitution, which created major new social spending commitments. While raising a legitimate point, this argument suffers from important limitations, including the fact that Brazil was already Latin America’s most heavily taxed country even before 1988. This chapter argues that Brazil’s heavy taxation must be understood in terms of how historical events have shaped the influence of statist and anti-statist actors. In Chile and Mexico, threats to property turned economic elites against the state. In Brazil, in contrast, elites have faced no comparable threat. As a result, they have not come to view state expansion as particularly alarming and have not organized intensively to thwart it. Authorities have thus felt relatively free to increase taxes. In addition, Brazil’s state-led development path has provided more fertile ground for labor to expand and wield influence. The origins and evolution of the 1988 constitution must be understood within this broader context.

This concluding chapter extends the scope of the book in three ways. First, it explores the relevance of its argument for other Latin American countries. Second, it examines how well the argument travels outside this region. Finally, since the book’s argument would seem to reflect negatively on the possibility of attenuating Latin America’s profound social divisions, it closes by discussing its implications for this issue and pondering the way forward for advocates of equality. The chapter argues that the account developed to explain tax burden differences among the core cases also sheds much light on at least some other Latin American countries. While its grounding in the distinctive socioeconomic and political context of Latin America means that the argument does not perform as well elsewhere, it does speak usefully to a number of theoretical debates that transcend this region. With regard to the equality question, the chapter finds that a strategy based on gradual reform centered on the fiscal system represents the least bad of the available alternatives.

Even more than Chile, Mexico is a case of light taxation. Although its tax burden has increased recently, it remains well below the regional average. Non-tax revenue from PEMEX helps explain this situation, but it is not simply a product of reliance on oil. This chapter develops a political explanation of Mexico’s light taxation, which argues that the causal dynamics behind it are similar to the ones operating in Chile in two crucial respects. First, light taxation reflects a sustained power imbalance favoring anti-statist actors. Second, this imbalance is largely an unintentional, path-dependent consequence of efforts by a left-leaning government to redistribute property in favor of workers. The key reformist episode, which occurred during the mid-1930s, set in motion a reactive sequence whose result, strong business organization and the coming together of economic elites and social conservatives in a relatively cohesive anti-statist bloc, was subsequently reproduced through self-reinforcing mechanisms involving ideas and power. This bloc has held together under both authoritarian and democratic conditions, frustrating efforts to raise taxes and expand the public sector.

Recent decades have seen large tax increases in Latin America. The conventional wisdom that Latin American tax systems generate too little revenue seems harder to sustain today than in the past. What continues to be striking about the region’s tax burdens, however, is the great disparity between them. This book sheds light on this question through a comparison of Argentina, Brazil, Chile and Mexico. It argues that tax burden variance reflects the impact of historical episodes of redistribution that threatened private property. Where they occurred, such episodes impeded future taxation by prompting economic elites and social conservatives to organize to defend their interests, thus forging strong, enduring anti-statist blocs. These blocs hindered taxation both directly, by combatting efforts to boost revenue, and indirectly, by undermining statist actors, especially labor unions. This introductory chapter consists of five sections: the first provides an overview of Latin American tax systems, the second reviews the scholarship on tax burden determinants, the third sketches the book’s argument, the fourth explains the research design and the fifth describes subsequent chapters.

This chapter elaborates the argument developed inby empirically evaluating existing theories of the tax burden and using that analysis to construct an explanation of variance among the case study countries. While most theories are unconvincing, three variables from the literature do resonate with the cases: non-tax natural resource revenues, certain distinctive features of the Brazilian and Chilean constitutions and, most crucially, an expanded version of the power resource perspective, which suggests that the tax burden reflects the balance of power been statist and anti-statist forces. The shortcoming of this argument is that it does not explain cross-national differences in this power balance. Hence, the chapter develops an account, drawing on path dependence theory, tracing these differences to the occurrence or not of reform waves that threatened private property. Where such waves occurred, in Chile and Mexico, they impeded future taxation by prompting the formation of enduring anti-statist blocs anchored by peak business associations and rightist parties. In Argentina and Brazil, in contrast, such waves did not occur and anti-statism remained a less powerful force.

Considering that Chile is among the wealthiest countries in Latin America, its tax revenues are low. Its tax burden in recent years has been far below those of Argentina and Brazil and is even surpassed by those of some much poorer countries, like Bolivia, Ecuador and Honduras. A law passed in 2014 promised to boost revenues significantly, but as of 2017 it had not done so. This chapter seeks to explain Chile’s light tax burden. Resource extraction plays an important role in Chile’s economy, but it cannot explain the country’s light tax burden since fiscal revenues from this source are modest. The central argument is that light taxation reflects the indirect impact of a major redistributive reform wave during the early 1970s that unwittingly tilted the balance of power in Chilean society in favor of anti-statist forces in an enduring manner. It did so in the short term by providing the impetus for a radical state retrenchment program under military auspices, and in the longer term by fomenting the rise of actors and institutions capable of sustaining anti-statism as an influential force under more democratic conditions.