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Public Reactions to the Growth of Taxation and Government Expenditure

Published online by Cambridge University Press:  13 June 2011

Douglas A. Hibbs Jr  and
Henrik Jess Madsen
Douglas A. Hibbs Jr
Affiliation:
Harvard University
Henrik Jess Madsen
Affiliation:
Harvard University
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Abstract

Opinion poll and behavioral evidence indicates that public resistance to the growth of taxation and state expenditure has increased significantly during the last decade in many advanced industrial democracies. This paper examines trends in the magnitude, composition, and consequences of taxation and government spending in relation to cross-national patterns of popular opposition to the expansion of the welfare state in five European industrial societies. The evidence suggests that the politically optimal system of taxation and expenditure relies heavily on indirect and programmatic taxes rather than on direct, general-revenue levies, and channels state resources toward cash transfers to households rather than into labor-intensive public consumption.

Type
Research Note
Information
World Politics , Volume 33 , Issue 3 , April 1981 , pp. 413 - 435
Copyright
Copyright © Trustees of Princeton University 1981

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References

1 This section is based on Hibbs, Douglas A. Jr, Long-Run Trends in Strike Activity in Comparative Perspectives, monograph, Center for International Studies, Massachusetts Institute of Technology (Cambridge, 1976)Google Scholar, and Hibbs, , “On the Political Economy of Long-Run Trends in Strike Activity,” British Journal of Political Science, VIII (Part 2, 1978), 153–76.CrossRefGoogle Scholar

2 But see the attempt by Wilensky, Harold, The “New Corporatism,” Centralization and the Welfare State (Beverly Hills: Sage Professional Papers in Contemporary Political Sociology, 1976).Google Scholar Since Wilensky included racist and xenophobic outbursts along with genuine antitax, antispending activities in his attempt to measure “tax-welfare backlash,” we did not make use of his quantitative scores.

3 See Jackson, Dudley, Turner, H. A., and Wilkinson, Frank, Do Trade Unions Cause Inflation? 2d ed. (Cambridge: Cambridge University Press, 1975).Google Scholar

4 Evidence consistent with this argument also appears in Johnston, J. and Timbrell, M., “Empirical Tests of a Bargaining Theory of Wage Rate Determination,” The Manchester School of Economic and Social Studies, XLI (June 1973), 141–67.CrossRefGoogle Scholar

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7 It was widely believed among Danish election specialists that Glistrup's Progressives would quickly recede from the political scene. See, for example, Damgaard, Eric, “Stability and Change in the Danish Party System over Half a Century,” Scandinavian Political Studies, IX (1974), 103–26CrossRefGoogle Scholar, who speculated just after the 1973 election about the likelihood of an early “reinstating” election.

8 Rusk, Jerrold and Borre, Ole, “The Changing Space in Danish Voter Perceptions 1971–1973,” European Journal of Political Research, 11 (No. 3, 1974), 329–61.CrossRefGoogle Scholar

9 The Meidner Plan was the LO's (the blue-collar peak union) proposal to gradually place ownership and control of large firms in the hands of the trade unions.

10 See Petersson, Olof, “The 1976 Election: New Trends in the Swedish Electorate,” Scandinavian Political Studies, I (new series, Nos. 2–3, 1978)Google Scholar, and Zetterberg, Hans, “The Swedish Election of 1976,” paper presented to the World Association of Public Opinion Research, Uppsala, August 1977.Google Scholar

11 Taxation was rated as an important issue by 84 percent of the electorate. Forty percent of the voters thought taxation would be lower under a bourgeois government than under a Social Democratic one; only 17 percent believed the reverse. See Petersson, Olof, Valundersökningar. Rapport 3. Teknisk Rapport (Stockholm: Statistiska Centralbyrån, 1977).Google Scholar

12 Several decades ago the politically critical share was generally assumed to be about 25 percent of the national income.

13 Before 1970, income taxes in Denmark were paid on the income of the previous year. Since nominal incomes were growing rapidly, a rapid increase occurred in the contemporaneous effective tax rate because book rates were not adjusted downward.

14 See Elvander, Nils, “The Politics of Taxation in Sweden 1945–1970: A Study of the Functions of Parties and Organizations,” Scandinavian Political Studies, VII (1972), 63–82.CrossRefGoogle Scholar

15 This appears to be true even though social security or public pension schemes in all countries are effectively based on intergenerational transfers.

16 A change in the Swedish pension system shifted all social security taxes to employers and self-employed income earners after 1974.

17 On productivity differentials between labor-intensive and non-labor-intensive activities, see Baumol, William J., “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis,” American Economic Review, XXIX (June 1967), 415–26Google Scholar, and Hazeldine, Tim, “Unbalanced Growth in the Welfare State,” Scottish Journal of Political Economy, XXXIII (No. 3, 1976), 221–34.CrossRefGoogle Scholar

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19 See for example, the OECD's study of higher education, Education, Inequality and Life Chances (Paris: OECD, 1975)Google Scholar; LeGrand, Julian, “The Distribution of Public Expenditure: The Case of Health Care,” Economica, XXXV (May 1978), 125–42CrossRefGoogle Scholar, a study of health care in England and Wales; Platz, Marion, Velkommen til børnehaveklasserne (Kbhv.: Socialforsknings-instituttet, i kommission hos Teknisk Forlag, 1977)Google Scholar, a study of preschool education in Denmark; and Assum, Terje, “Hvem har nytte av forbruker-service?” Artikler fra Statistisk. Centralbyrå, No. 64 (1974)Google Scholar, a study of government-supplied consumer services in Norway. Among the most important recent studies is Esping-Andersen, Gösta, “Social Democracy and State Policy in Denmark and Sweden,” Ph.D. diss. (University of Wisconsin, 1978).Google Scholar

20 Cf. Heidenheimer, Arnold J., Heclo, Hugh, and Adams, Carolyn Teich, Comparative Public Policy: The Politics of Social Choice in Europe and America (New York: St. Martin's Press, 1975).Google Scholar

21 See Rose, Richard and Peters, Guy, Can Government Go Bankrupt? (New York: Free Press, 1978)CrossRefGoogle Scholar for a prominent illustration.

22 Myrdal, Gunnar, “The Place of Values in Social Policy,” Journal of Social Policy, 1 (No. 1, 1972), 2.CrossRefGoogle Scholar

23 See the poll data reported in the New Statesman, 18 May 1979, pp. 704–06; also Crewe, Ivor, “Why the Conservatives Won,” in Penniman, Howard, ed., Britain at the Polls (Washington, D.C.: American Enterprise Institute, forthcoming).Google Scholar