No Representation, without Local Taxation: Fiscal Origins of Local Government

• In Event: Historical Taxation and Representation: Actors and Institutions

Abstract

This paper examines the proliferation of local self-government institutions in the nineteenth century as a way to compensate for weak state capacity under a regressive tax regime inherited from old regime fiscal bargains. Drawing on an original dataset of local government reforms and sub-national revenue sources in Europe, Eurasia, Latin America, and East Asia between 1800-1914, the author identifies four outcomes and one unique pathway to the empowerment of local self-government. The paper identifies the challenges faced by regressive tax regimes in the early nineteenth century, the opportunity for participatory and representative local government to overcome such challenges by raising local support for direct taxation, and the political forces aligned for and against local direct taxation.

This paper combines a theory of the origins of local self-government with cross-national empirics on the timing and variation in local government reforms to situate local government at the forefront of our understanding of fiscal capacity, the redistributive consequences of taxation, and long run political and economic development. The paper aims to tie taxation and representation to the state-building and state capacity literature with its focus on the local political economic arena as the main setting for historical change in extractive institutions.

Author

• Otto Kienitz, Johns Hopkins University