Globalization and Capital Taxation in Consensus and Majoritarian Democracies

Abstract

This article contributes to the growing literature on the role that domestic political institutions play in mediating globalization pressures by arguing that the capital tax constraints arising from international economic integration are the most severe for countries with majoritarian political institutions. In doing so, the author solves a tax puzzle that challenges conventional thinking about how institutions condition the relationship between economic globalization and domestic politics. He presents a formal, game-theoretic model to sharpen the basic logic of his argument and then tests some of the model's predictions empirically using both quantitative and qualitative evidence.