Business Power and Tax Reform: Taxing Income and Profits in Chile and Argentina

Latin American Politics and Society, Vol. 52, 2010

Posted: 19 Aug 2015

See all articles by Tasha Fairfield

Tasha Fairfield

London School of Economics & Political Science (LSE)

Date Written: August 18, 2015

Abstract

This article examines efforts to increase taxation of highly concentrated, undertapped income and profits in Latin America in the aftermath of structural adjustment. Argentina has advanced further than Chile in two policy areas: corporate taxation, which taps firm- level profits; and tax agency access to bank information, which helps reduce income tax evasion. These outcomes are explained by drawing on the classic concepts of business instrumental power, which entails political actions, and structural power, which arises from investment decisions. In Chile, strong instrumental power removed reforms in both areas from the policy agenda. In Argentina, much weaker instrumental power at the cross-sectoral level facilitated corporate tax increases. Bank information access was expanded after Argentina’s 2001 crisis weakened the financial sector’s instrumental power and reduced structural power.

Keywords: Business power, Chile, taxation, inequality, politics

JEL Classification: P16

Suggested Citation

Fairfield, Tasha, Business Power and Tax Reform: Taxing Income and Profits in Chile and Argentina (August 18, 2015). Latin American Politics and Society, Vol. 52, 2010, Available at SSRN: https://ssrn.com/abstract=2646890

Tasha Fairfield (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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