Legislative Knowledge Networks, Status Quo Complexity, and the Approval of Law Initiatives

• DOI: http://doi.org/10.1111/lsq.12107
• Published date: 01 February 2016
• Author: Ernesto Calvo,Ernesto Stein,Alejandro Bonvecchi
• Date: 01 February 2016

ALEJANDRO BONVECCHI

Universidad Torcuato Di Tella-CONICET

ERNESTO CALVO

University of Maryland-College Park

ERNESTO STEIN

Inter-American Development Bank

Legislative Knowledge Networks,

Status Quo Complexity, and the

Approval of Law Initiatives

In this article, we explore the role of legislative knowledge networks (LKN)

in the enactment of tax policy in Argentina. Findings show that legislative innova-

tion follows a hierarchical (power law) structure with a few distinct issue areas

dominated by key enacted bills. Taxation in Argentina is well described by three

main issue areas: the VAT laws, the income tax, and the revenue-sharing legisla-

tion. We provide evidence that complexity in the status quo, as described by a

larger number of important precedent laws, reduces the likelihood of final approval.

Our research departs from existing models of delegation by considering complexity

in the status quo rather than complexity in the proposal. We argue that more com-

plex status quo should be accounted for when trying to assess whether legislators

draft more or less detailed law initiatives.

New governmentpolicies create new politics.

—E. E. Schattschneider 1935

First, let me clarifythat this is not a new tax. This is just a simplifiedsystem for the col-

lection of the valueadded tax, the income tax, and the retirement system tax.

—Former Representative and current President Cristina Fernandez de Kirchner,

defending an amendment to the Simplif‌ied Income Tax System (Monotributo)inthe

House of Representatives, initiative 0004-PE-1998.

On May 6, 1998, House Representative Cristina Fernandez de

Kirchner forcefully argued in favor of a revenue sharing amendment to

bill 0004-PE-1998, the Simplif‌ied Income Tax System popularly known

LEGISLATIVE STUDIES QUARTERLY, 41, 1, February 2016 89

DOI: 10.1111/lsq.12107

V

C2016 Washington University in St. Louis

as the Monotributo. The law initiative proposed by Argentine President

Carlos S. Menem created a simplif‌ied tax system for small contributors,

scheduling f‌ixed monthly tax payments in lieu of the traditional income

tax for individuals in the lower income categories.

The original version of the initiative drafted by the Executive

bypassed existing revenue-sharing legislation, allocating all resources

from the enacted tax to the federal government. Supporters of the

project, Congressional records show, sought to describe the monotributo

as a “new” tax that was not covered and should not be included in exist-

ing revenue-sharing agreements. Such normative choice triggered

spirited debates in committee and on the plenary f‌loor, with the federal

government and provincial interests at odds with each other.

Arguments among representatives of the smaller provinces quickly

challenged the notion of the Monotributo as a new tax. As argued by

then House Representative Cristina Fernandez de Kirchner, the proposed

law simplif‌ied the payment of three taxes that were already codif‌ied in

existing revenue-sharing rules: the value-added tax, the income tax, and

social security taxes embedded in an omnibus bill approved in 1991.

The revenue-sharing battle had already been fought, she argued. These

spoils were not up for grabs, and they should be allocated according to

preexisting agreements.

Indeed, laws seldom appear out of thin air. An overwhelming

majority of initiatives that regulate complex social phenomena have

many moving parts (Huber and Shipan 2002), borrowing normative and

political strength from existing issue areas embedded in multiple laws

and regulations (Heclo 1978). Such legislation bears the scars of prior

distributive f‌ights, which grants rights to individuals and groups to be

passedontothenew legislative proposals. Those with the institutional

strength to renegotiate existing agreements often seek to reinterpret

current legislation or to advance initiatives that revise acquired rights.

Defenders of the status quo, by contrast, cite existing precedents and

describe the new legislation as derivative from current rules.

In this article, we seek to understand how complexity in the status

quo affects the success of proposed legislation in Congress. Initiatives,

we argue, borrow technical, normative, and political strength from a

web of existing legislation, with precedent laws setting up legislative

knowledge networks that provide opportunities and constraints to policy-

makers. We analyze in detail one of these knowledge networks,

exploring the determinants of tax policy enactment in Argentina.

Similar to scientif‌ic citations, legislative information is stored in

the nodes of legislative knowledge networks.

1

Legislative knowledge

networks are also acyclic given that time f‌lows only in one direction

90 Alejandro Bonvecchi, Ernesto Calvo, and Ernesto Stein