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Political Economy of Redistribution in the United States in the Aftermath of World War II—Evidence and Theory †

Political Economy of Redistribution in the United States in the Aftermath of World War... Abstract We present legislative, historical and statistical evidence of a substantial upward ratchet in transfers and taxes in the US due to World War II. This finding is explained within a political-economy framework with defense spending responding to a war threat and a median voter in the population who interacts with a (richer) agenda setter in Congress in setting redistribution. While the setter managed to cap redistribution before the War, the War itself raised the status quo tax burden and improved tax collection technology, strengthening the bargaining power of the median voter as defense spending receded. This permanently raised the level of redistribution. (JEL D72, H11, H23, H56, N32, N42 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Political Economy of Redistribution in the United States in the Aftermath of World War II—Evidence and Theory †

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Publisher
American Economic Association
Copyright
Copyright © 2016 by the American Economic Association
Subject
Articles
ISSN
1945-7731
eISSN
1945-774X
DOI
10.1257/pol.20140193
Publisher site
See Article on Publisher Site

Abstract

Abstract We present legislative, historical and statistical evidence of a substantial upward ratchet in transfers and taxes in the US due to World War II. This finding is explained within a political-economy framework with defense spending responding to a war threat and a median voter in the population who interacts with a (richer) agenda setter in Congress in setting redistribution. While the setter managed to cap redistribution before the War, the War itself raised the status quo tax burden and improved tax collection technology, strengthening the bargaining power of the median voter as defense spending receded. This permanently raised the level of redistribution. (JEL D72, H11, H23, H56, N32, N42 )

Journal

American Economic Journal: Economic Policy – American Economic Association

Published: Nov 1, 2016

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