TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, January 18, 2018

Chorvat & Chorvat: The Dynamic Stability Of Progressive Taxation

TaxingElizabeth Chorvat (Illinois) & Terrence R. Chorvat (George Mason), The Dynamic Stability of Progressive Taxation, 71 Nat'l Tax J. 1 (2018) (reviewing Kenneth Scheve & David Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton University Press 2016)):

The optimality of progressive taxation is influenced by various factors including elasticities of response, taxpayers’ ability to hide income, the technology of government enforcement, et cetera. In Taxing the Rich, Scheve and Stasavage point to the large increases in taxes on the rich which accompanied the entrance of various countries into the two world wars of the twentieth century and conclude that high taxes on the rich have been sustained essentially only in times of mass mobilization for war, the prime examples of which being the two world wars. Although they are careful not to assert that it is the only setting in which significantly progressive taxes can be implemented and maintained, the authors argue that mass mobilization is the only factor which can be isolated as correlative with highly progressive taxation. Based on the Scheve and Stasavage data — including observations from the tax systems of twenty-one countries between 1800 to 2010 — and the Stata commands used in their analysis online, we conclude that not only are there other factors that have determined the dynamics of progressivity, but that these factors appear to be more important than military mobilization.

Based on our analysis, for example, we strongly suspect that social cohesion and stability may be another, and arguably more important, factor.

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