Parties, Electoral Systems and Taxation 1870-1945

In this paper I argue that the effect of ideology on tax structure depends on the electoral system. Earlier research has argued that left wing governments tax more progressively, but in light of recent empirical work, this has been challenged. The dominant approach instead posits that the left taxes regressively while spending progressively. That is, the left still redistributes more, but it taxes regressively. I show that in the time period leading up to the Second World War, the impact of having a left wing head of government is different depending on the electoral system. In majoritarian systems, left government leads to a more progressive tax system with a heavier emphasis on income tax and less on excise and consumption. In proportional representation systems, the left taxes consumption heavier and income lighter. I argue that this is the result of representation and post-electoral bargaining shaping the strategic context in which the left operates. ∗Department of Political Science, Lund University, Box 52, SE-221 00 Lund, Sweden. Phone: +46 2228942. Email: [email protected]