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WiSe 20/21: Taxing the Rich

Lukas Hakelberg

Kommentar

The progressive taxation of high incomes, property and wealth is a crucial instrument for the reduction of income inequality. Therefore, median voter theory expects democratically elected governments to adopt more progressive taxes as soon as a country's average income rises above the income of the median voter. Despite rising income and wealth inequality in most democracies since at least the 1980s, however, tax systems have tended to become less rather than more progressive. In this seminar, we'll investigate the reasons for this. In a first step, we'll study the circumstances under which governments started to tax the rich. War plays an important role here, but changes in economic structure and other types of crises also had their impact. In a second step, we'll study why the majority of voters supported regressive tax reforms, which seemed to go against their objective economic interests. Lobbying, rich people's movements and welfare chauvinism provide important parts of the explanation. In the third and final step, we'll look at exit strategies of the rich, including tax evasion and tax avoidance, and debate why governments have only had limited success in curbing these phenomena. Schließen