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The recent rise in inequality in the distribution of disposable income in many, although not all, countries has led to a search for explanations, particularly since for much of the postwar period falling income inequality has been the norm. In the OECD countries, on which this chapter concentrates, the cause has been identified as rising wage dispersion, coupled with persistent unemployment in Europe. However, a number of factors need to be brought into any explanation of the extent and timing of changes in income distribution, including movements in factor shares, changes in real interest rates, and the impact of the government budget. This chapter focusses on the last of these. It has five sections: Introduction; Redistributive Impact of the Government Budget in selected OECD countries—a review of the statistical evidence from five OECD countries where a time series of studies covering the 1980s and the 1990s is available (UK, Canada, West Germany, Finland, Sweden; The Government Budget in Principle and Policy Reaction to Demographic Shifts—a simple framework within which the distributional implications of different government policy responses to changes in economic conditions and the different elements influencing the choice of response are explored; Policy Changes in Redistributive Taxes and Transfers: Case Studies of Unemployment Benefit and Personal Taxation—in the five European countries already studied, and in the US; and Summary of Conclusions.

This chapter discusses the relationship, in historical and theoretical terms, between capitalism and the state, and between the tax-state and early modern absolutism. The case study of British development from the Elizabethan Age, through the Civil Wars of the 1640s and the Glorious Revolution, into the eighteenth-century is considered. The particular model of British constitutionalism – balancing a strong executive state with vibrant parliamentarianism fostering commercialism - is outlined. In a return to historicized theory, the question is discussed of what agency – bourgeoisie, aristocracy, or state – is prior in constitutional modernization.

The structure of Florida’s government and the state’s public policies have been transformed during the modern two-party era, and the chapter identifies the contributions made by the Republican partisans during that transformation. The chapter includes a narrative of the Republican dogma in areas of public policies, including criminal justice and prison reform; taxation and economic incentives; consumer protection; and environmental reform, including reform for the Florida Everglades. The chapter discusses the policy changes that occurred in bipartisan efforts between Republicans and Democrats; it describes the policy changes in the wake of the Republican majority, including changes in school choice and other areas; and it contrasts the changes from the policies of the one-party, Pork Chop era, to the two-party system.

This chapter examines two aspects of economic policy: fiscal policy and industrial policy. The findings reject the “market economy” image of Hong Kong, and show that political considerations often override economic logic in shaping economic policy. In Hong Kong, economic ideology is frequently used as a tool to legitimate political choices about the economy, which are often biased towards the benefit of more privileged groups. The best example of how power distribution shapes resource allocation is the fiscal system, under which the politically powerful are often taxed less but benefit more. The political system dominated by the rich and powerful also deprives the government of sufficient state capacity and state autonomy for carrying out effective industrial policies to transform and restructure the economy.

This chapter examines Sir Arthur Clarke's term as Financial Secretary and the works of the First Review Committee. Clarke had arrived in the Colony in 1930 and served as Commissioner of War Taxation in 1940 and 1941. After the war, he was promoted to Deputy Financial Secretary under Follows and secured the top job when Follows retired at the end of 1951. In 1952, Governor Alexander Grantham established the First Inland Revenue Ordinance Review Committee to review the Inland Revenue Ordinance. Clarke served as the Committee's chairman, but as will be seen, its terms of reference forbade it to consider the possibility that Hong Kong should have a normal income tax, or that the schedular taxes should be extended to cover offshore income.

Governments usually intervene through taxation or regulation to manipulate market decisions as well as their outcomes. This chapter guides readers into thinking about the extent to which regulations adopted by governments are implemented out of public interest. It shows why it can be misleading to regard “cross-subsidies” as acts of pure corporate social responsibility. It also explains why the regulations advocated by green groups to reduce pollution can be inefficient. It examines regulations in foreign countries and shows that they are not flawless.

This Chapter considers the fiscal regime applying to operations on the UK Continental Shelf, with a particular focus on those elements of taxation that are specific to the oil and gas industry. The discussions include the Petroleum Revenue Tax, Ring Fence Corporation Tax and the Supplementary Charge. The Chapter subsequently speculates on the future direction of upstream taxation: given the extent of fiscal instability that has characterised the history of the UKCS as a hydrocarbon province and given the economic position of the country at present and for the foreseeable future, how will the Government strike the balance between regarding the industry as a cash cow to be milked when times are tough and the need to encourage continuing investment in the mature province to ensure maximum recovery?

Chapter Three shifts to state and local court cases in the early 20^th century, many of which highlight the different unequal tax structures imposed in mandatory segregation states in the South. Whether separate taxation or supposedly "colorblind" taxation, this chapter argues that both of these systems were deployed by all-white school boards and excise boards to ensure that black schools received a tiny fraction of the resources due them and that in many cases African Americans were doubly taxed for the support of white schooling. Finally, this chapter examines the letters written to the NAACP in the 1920s and 1930s as well as news articles and speeches illustrating the importance of the taxpayer citizenship claim made by many African Americans in this period.

This chapter considers the immediate impact of the Union, and its failure to deliver what was promised. The nature of post-Union patriotism and anti-Unionism are explored. The basis of support in Scotland for the Jacobites is investigated, while attention too is drawn to the strength of commitment there was to the Union and its corollary the Hanoverian succession during the Jacobite rising of 1715-16.

The financial crisis has triggered new debates on regulation and taxation of the financial sector. Economists and policy makers were challenged to understand the sequence of events and the complex interactions between financial markets and the real economy—often not captured by economic models. The literature on banking and finance has paid almost no attention to policy design, such as taxation and regulation issues. Only since recently, a new field of research has been emerging that brings together insights from public finance and banking, with the aim to better understand what had happened and how policy could prevent a similar occurrence. This chapter offers a presentation of recent developments in taxation and in regulation of the financial sector. It summarizes the contributions contained in this volume, putting them in perspective, showing their points of agreements and disagreements and displaying their complementarities, pioneering on the critical issues for policy design.

In the final chapter we draw out some of the implications of the picture we paint in the rest of the book for the current – and possible future – policy debate. Wealth is large, very unequally distributed, and its possession not only represents economic advantage, but also reinforces economic advantage, not just in people’s own lives but also across generations. But public policy towards it could be described as at best incoherent. We look at the central policy issues suggested by our analysis. What reforms might follow to achieve more economic efficiency or the aims of those starting from different political perspectives? Past experience suggests that coherent reforms are hard to achieve. The evidence presented in this volume shows, however, that the current policy mix as it stands fails to meet objectives that many would see as reasonable or important.

The paper studies the optimal taxation of carbon emissions in a model with hyperbolic discounting. The social discount rate varies over time and a problem of time inconsistency arises. It is shown that standard carbon policies are insufficient to regulate the level of carbon in this economy. The first result of the analysis is that when society can successfully resolve the inconsistency problem by committing to a climate plan, a subsidy on fossil fuel reserves is required to induce future generations to abide by it. When commitment to a climate plan is not possible, a Markov perfect equilibrium of a dynamic game between generations is solved and it can be shown that the subsidy for removing a ton of carbon from the atmosphere is not equal to the tax for creating it, even though both have the same effect on the overall amount of the externality.

This chapter examines social democratic policies on public expenditure, disentangling the various purposes and instruments. High public spending is not in itself a sign of social democracy and the author argues that a defence of public expenditure requires a hard-headed analysis of its economic and social impact.

Martin T. Olliff informs us that, like the epic railroad construction of the nineteenth century, a system of roads and highways that were sturdy enough to serve heavy automobile and truck traffic required enormous outlays and concentration of capital—far more than could be supplied by private industry or state governments alone. Alabamians had consistently refused to support the railroads with public money but everything changed in 1916 with the first Federal Road Aid Act, a law that provided matching federal funds to states for post roads and highways. Predictably, Alabama and other southern states scrambled for the federal money. In 1921 a second Federal Road Aid Act supplied additional matching funds for a rudimentary interstate system. The Alabama Legislature passed a $25 million bond issue (huge for the time). Famous for its aversion to taxation, and fearful and hostile to the federal government, Alabama's government showed itself to be quite pragmatic, and persistent, when it came to securing federal money to build a decent system of state roads.

Chapter Three provides VC policy conceptualizations and histories that are essential to understanding what is being diffused. Knowing what the policy model is allows us to specify “what” and “how much” adaptation occurs. Venture capital is first depicted as an asset class that provides financial capital (as well as operational expertise and access to professional networks) in exchange for equity in high-growth, start-up companies. The chapter details the rise of the VC industry since its institutionalization in the World War II era and the asset class’s macroeconomic importance, in light of its ability to act as a driver of innovation, employment and economic growth. The chapter defines the categories by which public policymakers have supported VC as: regulation, taxation and funding, and depicts the Silicon Valley model as well as subsequent policy innovations by Israel and Taiwan.

This chapter motivates the topic of tax systems by discussing several tax phenomena that standard models of taxation cannot explain, and then generalizes the insights gained to characterize the limitations of modern tax theory. It defines a tax system and suggests why this new approach can generate insights into these issues. It then foreshadows the topics that the book will cover.

The question of additional taxes on banking institutions has recently been debated. At the same time, financial regulation in the banking sector is undergoing many changes aimed at strengthening financial stability. This chapter uses SYMBOL, a micro-simulation model of the banking system, to estimate contributions to systemic risk of individual banks under various future regulatory scenarios and compares them to their potential tax liabilities under alternative designs of Financial Activity Taxes and Bank Levies. The results show that when contagion is not avoided, all taxes perform about the same way. However, when contagion is avoided, bank levies outperform FATs.