Taxing the Rich: A History of Fiscal Fairness in the United States and Europe.

• Author: Blask, Ari
• Position: Book review

Taxing the Rich: A History of Fiscal Fairness in the United States and Europe

Kenneth Scheve and Daniel Stasavage

Princeton, N.J.: Princeton University Press, 2016, 259 pp.

Kenneth Scheve and Daniel Stasavage's Taxing the Rich: A History of Fiscal Fairness in the United States and Europe is an attempt to investigate the politics of inequality through the lens of taxation. The authors place themselves in explicit dialogue with recent left-leaning scholarship on the economics of inequality, especially the work of Thomas Piketty and Emmanuel Saez. Piketty's thesis in Capital in the Twenty-First Century, which appeared in 2013 and was an instant bestseller, is that capitalism stokes an ever-widening inequality of wealth and income clue to the tendency for returns on capital to exceed returns to labor. He argued that only a scheme of highly progressive income taxation can halt or reverse this inherent source of inequality.

Scheve and Stasavage ask: What prompts democratic governments to heavily tax the rich? Their inquiry is relevant to both supporters and critics of Piketty. For supporters of income and wealth redistribution, the relevant issue is: What arguments or political conditions are needed to produce the kind of tax policies necessary to check inequality in a capitalist economy? For detractors, it is: What arguments or conditions might lead a democracy to undermine free markets, the incentives for productive economic activity, and individual rights for the spurious goal of reducing gaps in wealth and income? Scheve and Stasavage are especially interested in whether increases in inequality will prompt democracies to increase taxes on the rich. Like Piketty, they focus on a small slice of top earners by examining and emphasizing top marginal rates. In the contemporary United States, for example, about only 1 percent of households are in the top income bracket.

Taxing the Rich begins with a review of political thought about taxation in the first two chapters, then moves to a statistical analysis demonstrating the relation between high taxes and war mobilization in the third and fourth chapters. The fifth and sixth chapters look at the reasons behind the relationship between high taxes and war, and the final three chapters analyze the decline in tax rates from their midcentury peak and the implications for the future.

Scheve and Stasavage use positivist social science methods in their research. Positivism in the social sciences can be thought of as an attempt to apply the research methods of hard science to the study of social phenomena. As with the hard sciences, positivist social research involves empirically testing the causal relationship between a set of independent variables and a dependent variable. Such tests may yield generalizable social laws (nomothetic relationships) that hold true across a given set of societies, cultures, or time periods. The idea that democratically governed countries will not go to war with one another is...