Making and Breaking Tax Systems (Geary Lecture 2012)

Abstract

'The fiscal history of a people is above all an essential part of its general
history. An enormous influence on the fate of nations emanates from the
economic bleeding which the needs of the state necessitates, and from
the use to which the results are put.'
Joseph Schumpeter, “The Crisis of the Tax State”, 1917/18, page 100

The above quote is from an article by Schumpeter which is often thought of
as one of the founding articles in the field of fiscal sociology. I am fairly
certain that many economists, even those who work in the field of public
finance, have not engaged very much with the issues that Schumpeter raises
here. It is worth bearing in mind he wrote the words above in an era when it
was common for governments of the most prosperous countries to raise around
10 per cent of GDP in taxes. Even then, the question that pre-occupied
Schumpeter was whether and how revenues on that scale were sustainable.
This requires a proper appreciation of the economic, social and political forces
that make tax raising possible.