When Do Economic Elites Support Increasing Taxation? Evidence from the American South

71 Pages Posted: 12 Jan 2021

See all articles by Jeffrey L. Jensen

Jeffrey L. Jensen

New York University (NYU) - New York University Abu Dhabi

Giuliana Pardelli

Independent

Jeffrey F. Timmons

NYU Abu Dhabi

Date Written: November 10, 2020

Abstract

When do economic elites support the expansion of the state’s ability to tax? Despite the disproportionate influence that elites are theorized to exert on politics, answers to this question remain elusive. We argue that elites will support increased taxation, including on themselves, when they believe greater fiscal capacity will yield collective goods that further their interests, they have political control, and they expect this control to persist into the future. We test our argument by measuring changes in state taxation using an annual panel of Southern slave states between 1840 and 1860. Our strategy exploits both institutional differences across these states in the de jure political control of the slaveowning elite and rising international demand for Southern cash crops. We find that states with greater slaveowner control responded to increased demand for their crops by raising taxes on slaves and land, their primary assets, to fund railroad construction.

Suggested Citation

Jensen, Jeffrey and Pardelli, Giuliana and Timmons, Jeffrey F., When Do Economic Elites Support Increasing Taxation? Evidence from the American South (November 10, 2020). Available at SSRN: https://ssrn.com/abstract=3738568 or http://dx.doi.org/10.2139/ssrn.3738568

Jeffrey Jensen

New York University (NYU) - New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

Jeffrey F. Timmons

NYU Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates
(971) 262 84523 (Fax)

HOME PAGE: http://https://nyuad.nyu.edu/en/academics/faculty/jeffrey-timmons.html

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