The early modern origins of contemporary European tax outcomes

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What explains variation in tax outcomes between European states? Previous studies emphasise the role played by political institutions, but focus mostly on the input side of politics – how access topower and policy making is structured – and the institutions of relatively recent times. It is argued in this article that output-side institutions related to the implementation of political decisions also matter and have deep institutional origins. As the classic literature has argued, the early modern period from 1450 to 1800 was formative for the development of fiscal capacity, but European states diverged in the stock of capacity they acquired. This article tests whether these differences still affect contemporary tax outcomes using a novel measure of fiscal capacity, based on the age, extent and quality of stateadministered cadastral records. The empirical analysis shows that, on average, countries with higher early modern fiscal capacity have higher tax revenue today, compared to countries with lower early modern fiscal capacity. This association is robust to different model specifications and alternative measurements. The findings have important policy implications as they indicate how deeply the current fiscal problemsof the continent are entrenched, but also point to what needs to be prioritised within ongoing tax reforms.

Period6 Jun 2017

Media coverage

1

Media coverage

  • TitleThe early modern origins of contemporary European tax outcomes
    Media name/outletEuropean Journal of Political Research
    Media typeWeb
    Date06/06/2017
    DescriptionWhat explains variation in tax outcomes between European states? Previous studies emphasise the role played by political institutions, but focus mostly on the input side of politics – how access topower and policy making is structured – and the institutions of relatively recent times. It is argued in this article that output-side institutions related to the implementation of political decisions also matter and have deep institutional origins. As the classic literature has argued, the early modern period from 1450 to 1800 was formative for the development of fiscal capacity, but European states diverged in the stock of capacity they acquired. This article tests whether these differences still affect contemporary tax outcomes using a novel measure of fiscal capacity, based on the age, extent and quality of stateadministered cadastral records. The empirical analysis shows that, on average, countries with higher early modern fiscal capacity have higher tax revenue today, compared to countries with lower early modern fiscal capacity. This association is robust to different model specifications and alternative measurements. The findings have important policy implications as they indicate how deeply the current fiscal problemsof the continent are entrenched, but also point to what needs to be prioritised within ongoing tax reforms.
    Producer/AuthorMICHELLE DARCY & MARINA NISTOTSKAYA
    PersonsErik Stubkjær