Current Institutional Affiliation
Professor & Chair, Political Science and International Relations, Bellarmine College of Liberal Arts, Loyola Marymount University

Award Information

Abe Fellowship 2014
Institutional Affiliation (at time of award):
Associate Professor, Political Science, Loyola Marymount University
Tax Structure, Politics, and Deficits

Why do some governments run chronic deficits while others do not? Why are some governments able to push through measures to restore fiscal balance more easily than others? This project seeks to understand how tax structure impacts government budgetary balance through a comparative study of the advanced industrial democracies. We know that different taxes are sensitive to different kinds of pressures. Some taxes are more prone to political backlash; others are affected by globalization differently; and some taxes are more sensitive to demographic changes. The mix of taxes a government uses, then, should matter, but there has been surprisingly little attention to how the revenue structure of the state impacts the ability of the government to manage budget deficits. The approach of this study is to analyze how various tax structures give rise to a specific kind of tax politics that ultimately impacts the ability of government to manage its finances. The project is a comparative study that relies on a mixed methodology to address the research question. Quantitative analysis will be used to test the effect of tax structure on deficits and fiscal consolidation across the advanced industrial democracies. The statistical analysis will focus on contemporary fiscal policy utilizing time series data from the 1970s to the present. Qualitative comparative case studies of Japan and Sweden will complement the quantitative analysis. While statistical analysis can establish correlation, the case studies will be used to analyze specific causal mechanisms. The project is highly policy relevant. The global financial crisis has left governments with higher levels of debt. Furthermore, in the advanced industrialized democracies demographics are and will continue to pressure government budgets. Many countries are experiencing aging populations, which push up government expenditures for social security. At the same time, low or declining fertility rates means that the population that will work and pay taxes is declining in relative terms. While more advanced in Western Europe and Japan, these trends will begin to squeeze the budgets of South Korea and China in the near future as well. If governments run chronic deficits, debt will accumulate and the burden of repayment may fall to the young or future generations, raising ethical issues about the distribution of the burden across generations. Moreover, high and sustained deficits can hinder the ability of the state to provide its core functions, from financing the basic social contract to national defense.