Why Atlas Hasn't Shrugged : Review Essay

Scholars, policy analysts, and lawmakers have long debated the relationship between steeply progressive taxes and economic prosperity. In their recent book, “Taxing the Rich: A History of Fiscal Fairness in the United States and Europe” Kenneth Scheve and David Stasavage take a step back to ask the broader, and perhaps more compelling, historical question: “When and why do countries tax the rich?” This essay reviews “Taxing the Rich.” It explores how the authors’ impressive comparative and historical analysis addresses why modern democracies have been able to tax the rich without negative consequences. Using a data set of tax laws and policies from twenty industrialized democracies across nearly two centuries, the authors persuasively document how “compensatory arguments” made during wartime have led to robust taxation of the wealthy. In addition to identifying the book’s important contributions to the existing literature, this review essay contends that Scheve and Stasavage have at times overlooked how historically-specific factors have also shaped steeply graduated taxes on the rich. They pay little attention, for example, to pre-war patterns of tax law and policy making that laid the groundwork for subsequent changes. Similarly, they discount the intensity of opposition to heavy taxes on the rich, even during wartime. And their story unabashedly embraces a strong form of technological determinism: it unfailingly accepts the conventional notion that wars are discrete events that can be easily disentangled from peacetime. In short, the authors have written an analytically rigorous account identifying the key variables behind the rise and fall of “soak-the-rich” taxation. Yet, the book’s analytical rigor in supporting its central claims comes with a price: the apparent trade off of simplifying the complexity of the past