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London School of Economics
“Top Income Shares, Business Profits, and Effective Tax Rates in Contemporary Chile,” with Michel Jorratt, Review of Income and Wealth, 2015.
“Top Income Shares, Business Profits, and Effective Tax Rates in Contemporary Chile,” with Michel Jorratt, Review of Income and Wealth, 2015.
“Redistribution Under the Right in Latin America: Electoral Competition and Organized Actors in Policymaking,” with Candelaria Garay, Comparative Political Studies, 2017.
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Economics and Politics Section Best Article Prize, Latin American Studies Association
Unexpected social policy expansion and progressive tax reforms initiated by right-wing governments in Latin America highlight the need for further theory development on the politics of redistribution. We focus on electoral competition for low-income voters in conjunction with the power of organized actors—both business and social movements. We argue that electoral competition motivates redistribution under left-wing and right- wing incumbents alike although such initiatives are more modest when conservatives dominate and business is well organized. Social mobilization drives more substantial redistribution by counterbalancing business power and focusing incumbents on securing social peace and surviving in office. By characterizing distinctive features of social-policy politics and tax-policy politics and theorizing linkages between the two realms, we contribute to broader debates on the relative influence of voters versus organized interests in policymaking. We apply our theory to explain “least-likely” cases of redistributive policies under conservative governments in Mexico (2000- 2012) and Chile (2010-2014).
Accepted version
Appendix: “Evidence and Alternative Explanations: A Bayesian Approach to Process Tracing”
“Structural Power in Comparative Political Economy: Perspectives from Policy Formulation in Latin America,” Business and Politics 17 (3): 411-442, 2015.
Structural power is a critical variable that merits more extensive and more explicit attention in Latin American political economy and in comparative politics more broadly. Assessing structural power in conjunction with its counter- part, instrumental power, can provide strong leverage for explaining variation in policy outcomes that affect business interests. However, structural power must be carefully defined and operationalized in order to capture its core attributes and nuances. This task requires wedding the concept’s “structural” underpinnings with policymakers’ perceptions and anticipated reactions. Moreover, the relation- ship between structural power and instrumental power must be carefully theo- rized. While these concepts encompass distinct channels through which business exerts influence, the two types of power may be mutually reinforcing. I argue that business interests shape policy outcomes when either their structural power or their instrumental power is strong, yet business influence will be more exten- sive and more consistent when structural power and instrumental power are both strong. However, electoral incentives, and more importantly, popular mobiliza- tion, can counteract business power. I illustrate these theoretical points with a case study of Chile’s 2014 tax reform proposal, a major policy initiative with important distributive consequences that received international press attention.
“Top Income Shares, Business Profits, and Effective Tax Rates in Contemporary Chile,” with Michel Jorratt, Review of Income and Wealth, 2015.
We contribute to research on inequality and world top incomes by presenting the first calculations of Chilean top income shares and effective tax rates using individual tax return microdata from 2005 and 2009. We pay special attention to business income, which dominates at the top. Our analysis includes not only distributed profits, but also the large proportion of accrued profits retained by firms, which are rarely analyzed given the difficulty of identifying individual owners. Our most conservative top 1 percent income-share estimate is 15 percent—the fifth highest in the top incomes literature. When distributed profits are adjusted for evasion, the top 1 percent share reaches 22–26 percent. When we broaden the income concept to include accrued profits, which we impute to taxpayers using ownership shares calculated from business tax forms, the top 1 percent share increases to a minimum of 23 percent. Despite this impressive income concentration, the top 1 percent pays modest average effective income- tax rates of 15–16 percent.
Accepted version
“Going Where the Money Is: Strategies for Taxing Economic Elites in Unequal Democracies.” World Development 47: 42-57, 2013.
How can policymakers circumvent obstacles to taxing economic elites? This question is critical for developing countries, especially in Latin America where strengthening tax capacity depends significantly on tapping under-taxed, highly-concentrated income and profits. Drawing on diverse literatures and extensive fieldwork, the paper identifies six strategies that facilitate enactment of modest tax increases by mobilizing popular support and/or tempering elite antagonism. Case studies from Chile, Argentina, and Bolivia illus- trate the effect of these strategies on the fate of tax reform initiatives. The analysis builds theory on tax politics and yields implications for research on reform coalitions and gradual institutional change.
“Business Power and Protest: Argentina’s 2008 Agricultural Producers’ Protest in Comparative Context.” Studies in Comparative International Development 46: 424-453, 2011.
The rare but important phenomenon of business protest has not been adequately addressed in either literature on contentious politics or literature on business politics. Using Argentina’s 2008 agricultural producers’ protests as an illustration, this paper develops the concept of business protest and situates it within the classic framework of business’ instrumental power, exercised through political actions, and structural power, arising from individual profit-maximizing behavior. Business protest entails public and/or disruptive collective action in either the economic arena or the societal arena. Business actors are most likely to consider protest in order to defend their core interests when their structural power is weak and when they lack sources of instrumental power that enhance the effectiveness of ordinary political actions like lobbying. I apply the business power and protest framework to explain the Argentine producers’ failure to influence export tax policy from 2002 through early 2008 and the emergence of protest against a 2008 tax increase. I then examine how the producers’ protests contributed to the reform’s repeal. The producers’ protests are an exceptional example of business protest in which the participants lacked key organizational resources that facilitate collective action.
Accepted Version
“Business Power and Tax Reform: Taxing Income and Profits in Chile and Argentina.” Latin American Politics and Society 52 (2): 51-71, 2010.
This article examines efforts to increase taxation of highly concen- trated, undertapped income and profits in Latin America in the aftermath of structural adjustment. Argentina has advanced further than Chile in two policy areas: corporate taxation, which taps firm- level profits; and tax agency access to bank information, which helps reduce income tax evasion. These outcomes are explained by drawing on the classic concepts of business instrumental power, which entails political actions, and structural power, which arises from investment decisions. In Chile, strong instrumental power removed reforms in both areas from the policy agenda. In Argentina, much weaker instrumental power at the cross-sectoral level facilitated corporate tax increases. Bank information access was expanded after Argentina’s 2001 crisis weakened the financial sector’s instrumental power and reduced structural power.
Accepted Version
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