Globalisierung und fiskalische Demokratie

This article addresses a dilemma: an effective tax state is a precondition for securing the political stability of economic globalization. But globalization, in the form of tax competition, undermines nation states’ capacity to democratically choose the level, structure and distribution of their tax revenues. To regain democratic fiscal self-determination, international regulation of tax competition is required. Yet, how can a single nation’s right to self-determination be delimited so that all nations can effectively exercise their right under conditions of fiscal interdependence? The article proposes a republican conception of fiscal self-determination and develops two principles of international tax policy and their institutionalization in an International Tax Organization (ITO).     

Do citizens care about government debt? Evidence from survey experiments on budgetary priorities

Ever since the Great Recession, public debt has become politicised. Some research suggests that citizens are fiscally conservative, while other research shows that they punish governments for implementing fiscal consolidation. This begs the question of whether and how much citizens care about debt. We argue that debt is not a priority for citizens because reducing it involves spending and tax trade-offs. Using a split-sample experiment and a conjoint experiment in four European countries, we show that fiscal consolidation at the cost of spending cuts or taxes hikes is less popular than commonly assumed. Revenue-based consolidation is especially unpopular, but expenditure-based consolidation is also contested. Moreover, the public has clear fiscal policy priorities: People do not favour lower debt and taxes, but they support higher progressive taxes to pay for more government spending. The article furthers our understanding of public opinion on fiscal policies and the likely political consequences of austerity.     

New Institutionalism and Minority Protection in the National Legislatures of Finland and Denmark

The individual camps within the new institutionalist paradigm generally argue that every political actor operates within a specific framework of opportunities and that the physical environment in which bargaining takes place is very important to understanding political outcomes. This article uses three of the new institutionalisms to answer two important questions concerning minority‐protecting institutions in the national constitutions of Denmark (Article 42) and Finland (Section 66). First, why were such institutions developed? Second, why were these institutions ultimately removed in Finland, but not in Denmark? For both countries, it is argued in this article that historical and discursive institutionalism are useful for understanding why such protections were originally considered necessary by particular political groups in society: the rise of socialism during the late twentieth and early twenty‐first centuries compelled non‐reformist parties to push strongly for constitutional change that would legalize powerful procedural tools that could delay and potentially reverse policy decisions passed in parliament. However, the article invokes rational choice institutionalism to explain why the outcomes in terms of the use of such institutions differed over time in the two countries: differences concerning the scope and timing of the relevant procedures compelled opposition parties to utilize them differently. As a result, the legislative process was often stalemated in Finland (and the procedures were subsequently removed in 1992), while in Denmark, the procedures contributed to a parliamentary culture based on consensus and pre‐legislative bargaining and hence, still remain.     

Demokratie oder Fiskalunion?

What challenges do European tax states face from fiscal integration? Which structural problems need to be overcome to deepen it? Building on insights from the literature on European integration, fiscal sociology and political economy, this article shows how the heterogeneity of European tax states sets high stakes for the legitimacy of further fiscal integration. It analyses the debate on a ‘fiscal union’, which shows a yawning gap here. The article concludes that fragmentation and ‘constitutionalization’ as well as the conflicts of interest and power around fiscal issues deem the democratizing impact of further integration unlikely, though not impossible.     

The tax-welfare mix: explaining Japan's weak extractive capacity

Abstract

Despite having the highest level of public debt in the Organisation for Economic Co-operation and Development (OECD), higher than Greece or Italy, Japan has one of the lowest aggregate tax burdens of the advanced industrial democracies. This paper asks why Japan, once described as a strong developmental state, has had such a weak extractive capacity, an inability to raise revenues to confront deficits and public debt? In contrast to the existing explanations that focus on political institutions, partisan preferences, or economic globalization, this article argues that Japan's ‘tax–welfare mix’ – the combination of taxes and redistributive welfare polices – undermined the state's long-term capacity to secure adequate tax revenue. More than just a source of revenue, taxes can be used directly to achieve redistributive goals, such as targeting low taxes and exemptions to specific groups. This study shows how Japan's tax–welfare mix diminished its extractive capacity through three mechanisms: the political lock-in of a redistributive social bargain struck around low taxes, the timing and sequencing of its tax policy and welfare development, and the erosion of public trust, which undermined tax consent. Beyond offering a new theory of extractive capacity, the tax–welfare mix explains aspects of Japan's tax structure that defy existing explanations and contributes to our understanding of the capitalist development state by highlighting the redistributive political function of tax policy and its long-term impact on state capacity.     

Do Municipal Mergers Improve Fiscal Outcomes?

Improved fiscal management is a frequent justification for promoting boundary consolidations. However, whether or not this is actually the case is rarely placed under rigorous empirical scrutiny. Hence, this article investigates if fiscal outcomes are improved when municipalities are merged. The basic argument is that the conceptualisation of fiscal management in political science is often too narrow as it focuses on the budget and pays hardly any attention to balances in the final accounts and debts – elements of management which are central to policy making. On this background, the causal relationship between municipal mergers and fiscal outcomes is analysed. Measured on the balance between revenues and expenses, liquid assets and debts, municipal mergers improve the fiscal outcomes of the municipalities in a five‐year perspective, although the pre‐reform effects tend to be negative. For liquidity and debt, however, the improvement only entails re‐establishing the levels prior to the reform. The testing ground is the recent mergers of Danish municipalities, which, it is argued, constitute a quasi‐experiment. This forms the basis of a Difference‐in‐Difference design, allowing the alleviation of endogeneity problems and enabling causal inference. The analysis is based on administrative data from the Danish municipalities in the period 2003–11.     

Understanding varieties of populism in times of crises

Abstract

This introduction presents the conceptual and analytical framework which constitutes the background for the special issue entitled ‘Varieties of Populism in Europe in Times of Crises’. More specifically, this contribution investigates how different populist parties in the European Union have been affected by the recent economic crisis and the more long-lasting political and cultural crises. Analytically, the article disentangles the role of the Great Recession vis-à-vis other factors (such as political and party system factors, but also structural social changes or cultural opportunities) in the growing strength of populist parties in various European countries. It argues that although the economic crisis has without any doubt provided a specific ‘window of opportunity’ for the emergence of new political actors, which have capitalised on citizens’ discontent, long-lasting political factors – such as the increasing distrust toward political institutions and parties – and the more recent cultural crisis connected with migration issues have offered further fertile ground for the consolidation of populist parties in several European countries. Furthermore, as confirmed by the articles presented in the special issue, the various crises have offered differential opportunities for different types of populism – both inclusionary and exclusionary.     

Labour market risks and political preferences: The case of temporary employment

The political economy literature has gathered compelling evidence that labour market risks shape political preferences. Accordingly, insecurity fuels support for redistribution and left parties. This article analyses this argument for temporary workers, a so far neglected risk category which has increased dramatically in the past two decades. Temporary workers also have been in the focus of recent insider‐outsider debates. Some authors in this line of research have argued that temporary work leads to political disenchantment – for example, non‐instrumental responses such as vote abstention or protest voting. This contradicts risk‐based explanations of political preferences. The article discusses both theoretical perspectives and derives conflicting hypotheses for the empirical analysis of temporary workers' policy and party preferences. The review reveals considerable ambiguity regarding the questions which parties temporary workers can be expected to support and what the underlying motives for party choice are. Synthesising arguments from both perspectives, the article proposes an alternative argument according to which temporary workers are expected to support the ‘new’ left – that is, green and other left‐libertarian parties. It is argued that this party family combines redistributive policies with outsider‐friendly policy design. Using individual‐level data from the European Social Survey for 15 European countries, the article supports this argument by showing that temporary, compared to permanent, workers exhibit higher demand for redistribution and stronger support for the new left. Neither the risk‐based nor the insider‐outsider explanations receive full support. In particular, no signs of political disenchantment of temporary workers can be found. Thus, the findings challenge central claims of the insider‐outsider literature.     

The politics of fiscal policy during economic downturns, 1981–2010

This article investigates fiscal policy responses to the Great Recession in historical perspective. It explores general trends in the frequency, size and composition of fiscal stimulus as well as the impact of government partisanship on fiscal policy outputs during the four international recessions of 1980–1981, 1990–1991, 2001–2002 and 2008–2009. Encompassing 17–23 Organisation for Economic Cooperation and Development (OECD) countries, the analysis calls into question the idea of a general retreat from fiscal policy activism since the early 1980s. The propensity of governments to respond to economic downturns by engaging in fiscal stimulus has increased over time and no secular trend in the size of stimulus measures is observed. At the same time, OECD governments have relied more on tax cuts to stimulate demand in the two recessions of the 2000s than they did in the early 1980s or early 1990s. Regarding government partisanship, no significant direct partisan effects on either the size or the composition of fiscal stimulus is found for any of the four recession episodes. However, the size of the welfare state conditioned the impact of government partisanship in the two recessions of the 2000s, with left‐leaning governments distinctly more prone to engaging in discretionary fiscal stimulus and/or spending increases in large welfare states, but not in small welfare states.     

Worldwide experience in sales taxation: Lessons for North America

Worldwide fiscal experience over the past twenty-five years indicates steady expansion in the political and academic constituency for expenditure taxation, including indirect taxes on consumption. Retail levies have emerged as the preferred method of indirect taxation of consumption, as older, pre-retail sales taxes have proven unsuited to modern economic structures. Increasingly, reform of sales taxation has involved a shift to one particular form of tax, the European Community type of value-added tax (VAT). This consumption tax option is again a topic of policy debate in North America, particularly in Canada where a VAT was under active consideration in 1985.This paper sifts through worldwide experience with broad-based sales taxes to identify lessons for tax policy in North America both in the short and longer-run. It indicates that the reputation of such taxes as regressive instruments may have been much exaggerated, and that in any case methods are available, particularly in Canada, for resolving equity issues in sales taxation. The VAT is shown to have marginal economic and administrative advantages over single-stage federal retail taxes in both Canada and the US. However, these advantages are not nearly so significant as in European countries where the VAT was adopted there. Further, sensible debate over the merits and limitations of the VAT in North America will call for much closer scrutiny of the problems unique to this form of tax. Finally, three political issues that were not significant in Europe will likely have an important bearing on any future choices of sales tax instruments, both in the U.S. and in Canada.     

Europeanisation and social movements: The case of the Stop TTIP campaign

Over the past years, the economic crisis has significantly challenged the ways through which social movements have conceptualised and interacted with European Union institutions and policies. Although valuable research on the Europeanisation of movements has already been conducted, finding moderate numbers of Europeanised protests and actors, more recent studies on the subject have been limited to austerity measures and the Transatlantic Trade and Investment Partnership (TTIP) has been investigated more from a trade unions’ or an international relations perspective. In this article, the TTIP is used as a very promising case study to analyse social movements’ Europeanisation – that is, their capacity to mobilise referring to European issues, targets and identities. Furthermore, the TTIP is a crucial test case because it concerns a policy area (foreign trade) which falls under the exclusive competence of the EU. In addition, political opportunities for civil society actors are ‘closed’ in that negotiations are kept ‘secret’ and discussed mainly within the European Council, and it is difficult to mobilise a large public on such a technical issue. So why and how has this movement become ‘Europeanised’? This comparative study tests the Europeanisation hypothesis with a protest event analysis on anti‐TTIP mobilisation in six European countries (Italy, Spain, France, the United Kingdom, Germany and Austria) at the EU level in the period 2014–2016 (for a total of 784 events) and uses semi‐structured interviews in Brussels with key representatives of the movement and policy makers. The findings show that there is strong adaptation of social movements to multilevel governance – with the growing presence of not only purely European actors, but also European targets, mobilisations and transnational movement networks – with a ‘differential Europeanisation’. Not only do the paths of Europeanisation vary from country to country (and type of actor), but they are also influenced by the interplay between the political opportunities at the EU and domestic levels.     

Partisanship in the setting and coordination of fiscal and monetary policies

Abstract. The principal concerns of this paper are with the roles partisan politics have played in the making of fiscal and monetary policies within OECD countries as well as the extent to which these policies have complemented each other. It is argued that parties of the left pursue fiscal policies that are distinctly different from those pursued by the right. The critical difference is in the way these parties use fiscal policy as a corrective mechanism for dealing with macroeconomic problems: leftist parties adopt counter–cyclical fiscal policies while rightwing parties adhere to pro–cyclical fiscal stances. The paper also examines two arguments regarding monetary policy and how partisan politics affect this policy area. The first and most conventional argument sees the formal independence of the central bank from government as a means of negating partisan influences on monetary policy; the second advances the proposition that, regardless of central bank independence, monetary authorities are not politically neutral but instead share views similar to those of parties on the right–hand side of the political spectrum. Empirical analysis, using a pooled cross–section time–series design with data from 14 countries between 1961 and 1994, produces evidence in favor of the argument concerning the role of partisanship in fiscal policy; it also shows little support for the view that central bank independence inhibits partisan influences while at the same time provides support for the thesis that central banks are politically non–neutral. Thus, coordination between fiscal and monetary policies is far less likely to occur when left–wing parties are in power.     

Changing State Fiscal Capacity and Tax Effort in an Era of Devolving Government, 1981 2003

The American system of fiscal federalism requires that stateand local governments finance the bulk of their budgets fromown-source revenues, not transfers. This article analyzes statetotal taxable resources from 1981 to 2003 to evaluate how statefiscal capacity has changed in that time and how it has beenaffected by national recessions, to examine the extent to whichfiscal capacity differs among states and whether capacity hasconverged, and to consider whether states have responded toservice demands by changing tax effort and whether tax efforthas converged in the face of interstate competition and otherharmonizing forces. Because the capacity measure employed herecan be compared across years, something impossible with majoralternative indices, the analysis provides insights importantto the analysis of fiscal federalism and of the implicationsof revenue devolution not previously possible.     

Inequality,marketisation and the left: Schools policy in England and Sweden

It is argued in this article that the marketisation of schools policy has a tendency to produce twin effects: an increase in educational inequality, and an increase in general satisfaction with the schooling system. However, the effect on educational inequality is very much stronger where prevailing societal inequality is higher. The result is that cross‐party political agreement on the desirability of such reforms is much more likely where societal inequality is lower (as the inequality effects are also lower). Counterintuitively, then, countries that are more egalitarian – and so typically thought of as being more left‐wing – will have a higher likelihood of adopting marketisation than more unequal countries. Evidence is drawn from a paired comparison of English and Swedish schools policies from the 1980s to the present. Both the policy history and elite interviews lend considerable support for the theory in terms of both outcomes and mechanisms.     

Comparative insight into the status of the lobbying regulation debate in Estonia

The article looks at lobbying regulation polemic based on the Estonian case‐study—how lobbying as an issue came to be on the political agenda and what the outcomes of the discussion have been. The article also provides a focused overview of how Estonia's neighbouring states have tackled the issue. The article looks at the lobbying agenda setting and policy choices of Western Baltic Sea countries (Finland, Sweden and Denmark) and of a sample of postcommunist states that share the destiny of Estonia in contemporary history (Latvia, Lithuania, Poland, Hungary and the Czech Republic). Copyright © 2014 John Wiley & Sons, Ltd.     

Partisanship in the setting and coordination of fiscal and monetary policies

The principal concerns of this paper are with the roles partisan politics have played in the making of fiscal and monetary policies within OECD countries as well as the extent to which these policies have complemented each other. It is argued that parties of the left pursue fiscal policies that are distinctly different from those pursued by the right. The critical difference is in the way these parties use fiscal policy as a corrective mechanism for dealing with macroeconomic problems: leftist parties adopt counter–cyclical fiscal policies while rightwing parties adhere to pro–cyclical fiscal stances. The paper also examines two arguments regarding monetary policy and how partisan politics affect this policy area. The first and most conventional argument sees the formal independence of the central bank from government as a means of negating partisan influences on monetary policy; the second advances the proposition that, regardless of central bank independence, monetary authorities are not politically neutral but instead share views similar to those of parties on the right–hand side of the political spectrum. Empirical analysis, using a pooled cross–section time–series design with data from 14 countries between 1961 and 1994, produces evidence in favor of the argument concerning the role of partisanship in fiscal policy; it also shows little support for the view that central bank independence inhibits partisan influences while at the same time provides support for the thesis that central banks are politically non–neutral. Thus, coordination between fiscal and monetary policies is far less likely to occur when left–wing parties are in power.     

Bureaucracies,Neoliberal Ideas,and Tax Reform in New Zealand and Ireland

Why did New Zealand adopt one of the most neoliberal tax systems in the world, whereas Ireland pursued a heterodox tax policy of low rates, deep deductions, and distortionary tax incentives? The diverging tax policy trajectories of these two small liberal market economies since 1980 are not well accounted for by conventional ideational, partisan, or political‐institutional explanations. The article argues that the varying degree of neoliberal reform is better understood as the result of differences in the institutionalization of economic knowledge within the state. Distinct administrative institutions in New Zealand and Ireland gave rise to profound differences in the identities, expertise, economic ideas, and policy advice approach of tax policy bureaucrats, which had a major impact on tax policymaking in the two countries.     

Fiscal rules,fiscal outcomes and financial market behaviour

Since the outbreak of the eurozone's sovereign debt crisis, a range of fiscal policy measures have been adopted at the European Union (EU) and national levels that have given rise to claims of a significant reinforcement of fiscal policy constraint. Given the prominence and reinvigorated political appeal of fiscal rules in the EU and beyond, it is disconcerting how little we actually know about the link between fiscal rules, budgetary outcomes and market behaviour. In this research note, the aim is to take stock of the existing literature and challenge its contribution to the current policy debate on the merits of fiscal rules. Specifically it will focus on problems linked to endogeneity, measurements and contextuality.     

Building European Union capacity to manage transboundary crises: Network or lead‐agency model?

In recent years, the European continent has witnessed a substantial number of “transboundary crises” – crises that cross geographical borders and affect multiple policy domains. Nation states find it hard to deal with such crises by themselves. International cooperation, thus, becomes increasingly important, but it is not clear what shape or form that cooperation should take. This article explores the growing role of the European Union (EU) in managing transboundary crises. More specifically, it reflects on the different ways in which the expanding contours of the EU's emerging crisis capacity can be organized. Using three “performative dimensions” – sense‐making, coordination, and legitimacy – the article discusses the possible advantages and disadvantages of a decentralized, network model and compares it with a more centralized, lead‐agency model. It concludes that the current network model is a logical outcome of the punctuated and fragmentary process through which EU crisis management capacities have been created. It also notes that the shortcomings of this model may necessitate elements of a lead‐agency model. Such “agencification” of networks for transboundary crisis management may well lead to a hybrid model that is uniquely suited for the peculiar organizational and political creature that the EU is.     

When Do the Rich Vote Less Than the Poor and Why? Explaining Turnout Inequality across the World

The conventional wisdom that the poor are less likely to vote than the rich is based upon research on voting behavior in advanced industrialized countries. However, in some places, the relationship between turnout and socioeconomic status is reversed. We argue that the potential tax exposure of the rich explains the positive relationship between income and voting in some places and not others. Where the rich anticipate taxation, they have a greater incentive to participate in politics, and politicians are more likely to use fiscal policy to gain support. We explore two factors affecting the tax exposure of the rich—the political salience of redistribution in party politics and the state's extractive capacity. Using survey data from developed and developing countries, we demonstrate that the rich turn out to vote at higher rates when the political preferences of the rich and poor diverge and where bureaucratic capacity is high.