Arenas of Federal Txa Policy

Sheldon D. Pollack, University of Delaware

Abstract

Federal tax policy is the product of a complicated political process. There are three distinct types of tax policy: distributive, regulatory, and redistributive. Each type of tax policy is made in a different political arena, by different political actors—and for different purposes. Furthermore, each arena is characterized by its own distinctive pattern of politics, decisionmaking, and interaction among the relevant participants. In this respect, political scientist Theodore Lowi was correct: the nature of the tax policy “causes” the politics. At the same time, much as an institutionalist approach would suggest, the “rules of the game” of each political arena structure the policymaking there. The institutional architecture of Congress facilitates distributive tax policymaking, just as the rules and norms of the professional tax bureaucracy are reflected in regulatory tax policymaking. Likewise, national electoral contests and shifting majoritarian coalitions produce an erratic redistributive tax policy— especially, with respect to the rate structure of the federal income tax. In the end, both an institutionalist approach and a policy-centered analysis are needed to explain the complex development of U.S. tax policy over the past century.