The Conscription of Wealth: Mass Warfare and the Demand for Progressive Taxation

Other External Scholars:
Kenneth Scheve, Yale University
David Stasavage, New York University
Project Date:
Jun 2008
Award Amount:
$61,640
Project Programs:
Social, Political, and Economic Inequality

Progressive taxation,where higher incomes are taxed at higher rates, played a significant role in reducing income inequality in many countries for much of the twentieth century. Recent moves in some advanced economies away from this system may help account for rising inequality in those nations. But what made progressive taxation politically viable in the first place? Prevailing analyses suggest that the expansion of voting to a broad-based electorate, coupled with the rise of left-wing political parties, led to the adoption of tax systems that require greater taxation of the wealthiest in a society and less from the poor and the middle class. While these factors may be important, political scientists Kenneth Scheve and David Stasavage propose an alternate explanation. They hypothesize that when a country engages in interstate war—and, in the process, mobilizes at least 2 percent of its population in the military—it creates popular demands for increasing progressive taxation to ensure equal sacrifice between those on the front lines and those who stay at home and make high incomes.

 

Scheve and Stasavage previously researched taxation rates in several European countries during World War I. They found that, between 1914 and 1920, tax rates on the wealthiest citizens increased dramatically—often by four times or more—while the lowest tax rates showed negligible increases or remained constant. With support from the foundation, Scheve and Stasavage will broaden their research to analyze the 120-year period between 1850 and 1970 in France, Japan, the United Kingdom, and the United States—four countries that engaged in interstate war during the period. They will develop several models showing the possible effects of mobilization, voting, and left-wing political power on year-to-year variation in the top tax rates of those countries. They will also analyze the same eight countries involved in the World War I study over this longer time period. The investigators believe that the longer time series will give them a more definitive statistical test of what happens when a country mobilizes such large numbers of people and resources for war. Finally, Scheve and Stasavage will gather evidence from contemporary sources, including parliamentary debates, newspapers, and magazines, to test their premise that mass mobilization creates a public demand for greater sacrifice on the part of the wealthy.

 

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