cansin-r / taxandtax

Inheritance tax as a proxy for all taxation? Ideology and tax rates post WW2?

taxAndtax

Inheritance tax as a proxy for all taxation? Ideology and tax rates post WW2?

The Conscription of Wealth: Mass Warfare and the Demand for Progressive Taxation by Kenneth Scheve and David Stasavage (2010) showed how progressive taxation rose after WW1 and concluded that mass mobilization for warfare caused increasing demands in progressive taxation. Through this analysis, we want to analyze how progressive taxation is influenced during periods of relative peace -- when there is no mass mobilizing warfare. What factor -- other than mobilization for war -- causes fluctuation in high income tax rates over time? In order to answer this question we needed data from more countries. However, the data available to us is regarding inheritance tax rates not progressive tax rates.

Hence, throughout this analysis, the first question we ask ourselves is: Given our data, can we use inheritance tax rates as a proxy for all taxation?

If the answer to the above question is yes, then: Is ideology the reason behind the decline of tax rates post 1950?

We expect the answer to the latter question to be affirmative. Most importantly, in accordance with common conception of political ideologies, we expect our analysis to show us a positive relationship between left executive and high tax rates.