Power Across Levels: The Politics of Tax Policy and Federalism
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2021
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Haverford College. Department of Political Science
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eng
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Haverford users only
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Abstract
What are the political influences on policy across each level of the United States government? Answering this question will highlight the receptiveness of a particular level of government to a citizen's concerns, help citizens explore the best way to advocate for their interests, and address tensions in the literature. I focused on three different schools of thought that discuss political influences on policymaking at a given level, but depending on the literature one focuses upon, one could argue that any of these three schools of thought are more likely to apply to a certain level of government compared to other levels of government. Empirical research can address these tensions and articulate the role government structure, government capabilities, or organized interests have on policymaking. The first school of thought on power in policymaking is majoritarian electoral democracy theory. This theory argues that candidates converge toward the ideological center to appeal to as many different voters as possible, thus leading to policies that represent the combination of voters' preferences. Majoritarian electoral democracy theory assumes that anyone who can vote does vote and gives the most power to the ideologically center voter. Federalist literature seems to suggest that this theory would better explain policymaking at the local level, and to a lesser extent the state level, than at the national level due to additional avenues of political participation, increased responsiveness that comes out of physical proximity, more pragmatic approaches, and efficiency from the delegation of fiscal responsibilities to these levels. The second school of thought is elite theory. This theory argues that to understand policy, one only needs to focus on the interests of those with economic, political, or social power. While there is disagreement in the literature on who qualifies as elite, the literature discusses homogenous social characteristics and institutions shaping a group identity and shared interests. Literature on the capabilities of each level of government indicates that elite theory would better explain policymaking at the local level, and to a lesser extent the state level, than at the national level because these levels are more susceptible to competition, leading them to create economic policies that appeal to businesses and the wealthy at the expense of individuals and communities in the area so that they can gain the necessary revenue to fund their services. The last school of thought I focused on in my thesis is pluralism. This theory focuses less on the government structure or capabilities and more on the role that organized interests play in influencing policy. Pluralism may play a larger role in local and state levels, however, because local groups have enhanced civic participation and political engagement and interest groups influence direct democracy initiatives, thus serving as a front-end force to ensure that constituent concerns are heard at the local and state levels in particular. Out of the literature arises three hypotheses: majoritarian electoral democracy theory is more likely to explain policymaking at the local level, and to a lesser extent the state level, than at the federal level; elite theory is more likely to explain policymaking at the local level, and to a lesser extent the state level, than at the federal level; and pluralism is more likely to explain policymaking at the local level, and to a lesser extent the state level, than at the federal level. I used case studies to test these hypotheses, with tax policy as the single case study for the policy area, and the U.S. Government, the New York State Government, and New York City Government as the single case studies for the federal, state, and local levels respectively. I looked at tax policies over the course of twenty years to see whose interests tended to be represented over time, both within the provisions themselves and once they were enacted. I read different tax provisions published by the Tax Policy Center or the government to select tax bills that seemed to play a role in the narrative. I then used the Tax Policy Center briefing book to analyze individual provisions and see who was most likely to use them, and dove into articles from newspapers, magazines, think tanks, and journals to explore how experts in various fields interpreted the front-end forces and the impact of legislation. Lastly, I consulted Pew Research Center and Quinnipiac University public opinion polls to see how people perceived various tax decisions and government actions or inactions. Using this data, I analyzed the roles of the different theories at each level. To analyze majoritarian electoral democracy, I consulted public opinion polls taken before and after government decisions to see if the actions addressed citizen concerns and how people felt about these decisions. I used the Tax Policy Center briefing book to explore if certain provisions catered to specific interests and the articles to see who benefited and which front-end forces were responsible for certain decisions. All three levels indicated the presence of elite influences, but the extent to which elite interests affected policies varies at each level. At the federal level, tax policy oscillates from aggressively catering to the elite to providing one provision for the elite while appealing toward many different interests. The one consistent theme within the past twenty years, however, is the disconnect between citizen preferences and government policies. Also, bills are often passed on partisan lines, but partisanship alone does not explain the impact of different political influences, nor does bipartisanship guarantee that a decision is the amalgamation of citizen interests. At the state level, elite influences seem to play a role, but so do other forces as well. State tax policies respond to organized interests and enact policies in line with concerns New York State residents expressed in public opinion polls. Many of these decisions occur around times where New York State revenue expenditures or sources significantly change, such as when the 2017 Tax Cuts and Jobs Act repealed the State and Local Tax deduction or when the 2008 recession occurred. It seems like New York State Government is motivated to act both in response to these changes and to revenues that have been decreasing the past fifty years. Lastly, New York City tax policy has been almost completely dominated by elite interests these past twenty years, fitting into a trend of a system that has been regressing since the mid-1970s. Mayor Bloomberg has made several decisions that hurt New York City residents' interests, and attempted several more, while Mayor de Blasio ran on a campaign to address inequality within New York City yet never seemed to truly deliver on his promise. For future research, I would recommend delving further into front-end forces and looking closely at voting records. Looking into which forces were lobbying for which provisions or understanding the rationale and thought process of elected officials as they voted on different legislation could shed further insights on the impact of political influences on policymaking. Also, seeing the extent to which policy decisions lined up with the interests of non-voters could highlight the extent to which policy takes into account the interests of communities and constituencies as a whole instead of just voters.