The Perils of Hidden Policy Change: Policy Drift and the Charitable Contributions Deduction

• In Event: 261 - Section on Political Sociology Refereed Roundtable Session and Business Meeting
  In Refereed Roundtable 60min: Table 05. Policy Determinants and Outcomes

Abstract

Scholars have widely acknowledged that tax expenditures, or deductions or credits that reduce taxable income, form a significant component of the American welfare state. These hidden benefits provide a range of social protections for taxpayers, but little is known about their temporal dynamics. This paper applies insights from the literature on gradual institutional change to gain purchase on the historical trajectory of one such expenditure: the tax deduction for charitable contributions. Scholars of gradual institutional change have provided us with a valuable means of comparing different forms of institutional change but have left us with an impoverished understanding of the processes underlying individual mechanisms of change. I develop a more precise analytical framework for one form of gradual institutional change—policy drift—to demonstrate that policies are vulnerable to drift with respect to their size and scope, their distribution of beneficiaries, and their meaning or interpretation. Using data from archival and public records, I examine these three forms of drift and their differential political implications through the lens of the charitable contributions deduction, finding that drift in size, scope, and distribution amplifies policy feedback processes, while interpretive drift enables the creation of sophisticated rationalizations for the deduction’s continued political relevance.

Author

• Kelly Russell, University of Michigan