Kenneth Scheve and David Stasavage. 2016. Taxing the Rich: A History of Fiscal Fairness in the United States and Europe. Princeton University Press, Princeton, NJ, USA. ISBN: 9780691165455, 288 pp., $29.95 (hardcover).
Reviewed by Paul Walker, West Virginia University
An incredibly relevant and much debated topic in the political realm is the question of how much of the tax burden should fall on the rich. This question has many important facets from what loopholes exist in the complex US tax system to arguments about top marginal rates and whether rates on various types of incomes and profits should be raised or lowered to the debates on how tax policy should be shaped to deal with the concerns about rising income inequality.
Much of this …show more content…
First in this section, the authors investigate the income tax from the turn of the 19th century to the end of the 20th. In the prior periods states primarily relied on indirect taxation as their means of collecting revenue and states did not begin to introduce income taxes until late 1800s, where top marginal rates were relatively constant and low until the early 1900s outside of minor blips when war financing was necessary. Again the authors explore the evidence to evaluate the role that democracy, specifically universal suffrage, inequality, and war mobilization had on the ballooning of top marginal tax rates on income. There is minimal evidence that these factors mattered, besides the mass mobilization for the first world war. In terms of compensatory arguments, the burden of draft and mass mobilization primarily feel on the poor and middle income citizens, thus the rich were thought they should bear the burden of financing the war. Next chapter five looks at the question of taxation on inheritance. Taxing inheritance is an effective tool in terms of reducing inequality, but as with income tax this motivation is not borne out in the evidence instead pointing to war financing as a reason for growing tax rates on estates passed on to the bequeathed. The final chapter of this middle section looks to put the taxes on the rich in context of the compensatory arguments. …show more content…
Chapter 6 takes a detailed look into the extent and reasoning behind taxing the rich for a selection of Western European and North American Countries, when their governments started to tax the rich more and those that profited from the Great War more heavily. The next chapter the authors turn their attention towards the reason that mobilization for the World Wars was a driving factor for taxing the rich. Here, the authors make the case that the timing of the World Wars and the current stage of technological development created an environment that was ripe for compensatory arguments that favored taxing the rich heavily. Explicitly, the railroad allowed for nations to assemble, transport, and supply massive armies that were filled through the conscription of its citizens, which opened the door for compensatory arguments on taxing the rich. Ultimately, the advancement of military weaponry lead to a decline in the reliance on mass armies and thus the decline in compensatory arguments for taxing the rich. Chapter eight explores why in the post war period taxes on the rich started to decline. First, the authors take on the notion that there was a post war consensus that the rich should be taxed at high rates to fund newly formed welfare states. While, these claims are not entirely incorrect, the case is made that it was not a consensus and had its detractors. Further, the
Reviewed by Paul Walker, West Virginia University
An incredibly relevant and much debated topic in the political realm is the question of how much of the tax burden should fall on the rich. This question has many important facets from what loopholes exist in the complex US tax system to arguments about top marginal rates and whether rates on various types of incomes and profits should be raised or lowered to the debates on how tax policy should be shaped to deal with the concerns about rising income inequality.
Much of this …show more content…
First in this section, the authors investigate the income tax from the turn of the 19th century to the end of the 20th. In the prior periods states primarily relied on indirect taxation as their means of collecting revenue and states did not begin to introduce income taxes until late 1800s, where top marginal rates were relatively constant and low until the early 1900s outside of minor blips when war financing was necessary. Again the authors explore the evidence to evaluate the role that democracy, specifically universal suffrage, inequality, and war mobilization had on the ballooning of top marginal tax rates on income. There is minimal evidence that these factors mattered, besides the mass mobilization for the first world war. In terms of compensatory arguments, the burden of draft and mass mobilization primarily feel on the poor and middle income citizens, thus the rich were thought they should bear the burden of financing the war. Next chapter five looks at the question of taxation on inheritance. Taxing inheritance is an effective tool in terms of reducing inequality, but as with income tax this motivation is not borne out in the evidence instead pointing to war financing as a reason for growing tax rates on estates passed on to the bequeathed. The final chapter of this middle section looks to put the taxes on the rich in context of the compensatory arguments. …show more content…
Chapter 6 takes a detailed look into the extent and reasoning behind taxing the rich for a selection of Western European and North American Countries, when their governments started to tax the rich more and those that profited from the Great War more heavily. The next chapter the authors turn their attention towards the reason that mobilization for the World Wars was a driving factor for taxing the rich. Here, the authors make the case that the timing of the World Wars and the current stage of technological development created an environment that was ripe for compensatory arguments that favored taxing the rich heavily. Explicitly, the railroad allowed for nations to assemble, transport, and supply massive armies that were filled through the conscription of its citizens, which opened the door for compensatory arguments on taxing the rich. Ultimately, the advancement of military weaponry lead to a decline in the reliance on mass armies and thus the decline in compensatory arguments for taxing the rich. Chapter eight explores why in the post war period taxes on the rich started to decline. First, the authors take on the notion that there was a post war consensus that the rich should be taxed at high rates to fund newly formed welfare states. While, these claims are not entirely incorrect, the case is made that it was not a consensus and had its detractors. Further, the