Regressive Taxation and the Welfare State

Government size has attracted much scholarly attention. Political economists have considered large public expenditures a product of leftist rule and an expression of a stronger representation of labour interest. Although the size of the government has become the most important policy difference between the left and right in post-war politics, the formation of the government's funding base is also important. Junko Kato finds that the differentiation of tax revenue structure is path dependent upon the shift to regressive taxation. Since the 1980s, the institutionalisation of effective revenue raising by regressive taxes during periods of high growth has ensured resistance to welfare state backlash during budget deficits and consolidated the diversification of state funding capacity among industrial democracies. This book challenges the conventional wisdom that progressive taxation goes hand-in-hand with large public expenditures in mature welfare states and qualifies the partisan centred explanation that dominates the welfare state literature.

"Too few political scientists have seriously examined the politics of taxation and the role it has in the political economy of modern states. Junko Kato's Regressive Taxation and the Welfare State bridges a major gap in understanding of the financing of the modern state. Her intriguing argument challenges the naive notion that progressive states must be financed through progressive taxes and in doing so, it makes an important contribution to the policy debate across the OECD." Sven Steinmo, University of Colorado, "Recent theories of globalization have presented us with a very strong argument, namely that economic integration forces modern welfare states to converge. In this truly comparative and well-researched book, Junko Kato delivers an intriguing result. It is a genuinely counter-intuitive, yet very convincing argument about the importance of the institutional foundation of the taxation side of welfare states. In this, Kato successfully challenges several well-established theories in comparative politics. The puzzle she portrays and explains is theoretically important for our understanding of the increasing variation in size between modern welfare states." Bo Rothstein, Goteborg University, "Overall, Kato provides a compelling mix of quantitative and qualitative data to equip the reader with some useful tools for considering what is at stake in the ongoing debate over the future of welfare state funding." Journal of Sociology and Social Welfare