Working Paper
No taxation without informational foundation

This paper combines cross-national statistical analysis and in-depth historical case studies of Argentina and Chile to explore the relationship between two crucial dimensions of state capacity.

We show that information capacity contributes to the development of fiscal capacity. States require accurate information about their subject populations, territories, and economies in order to effectively mobilize revenues. In developing this argument this paper makes three broader contributions.

First, while existing scholarship either treats distinct dimensions of capacity as separate entities, or simply assumes that they complement each other, our findings urge scholars to treat state development as sequential and to further investigate how multiple dimensions of state capacity are interrelated.

Second, the paper suggests a broader underlying set of mechanisms—economies of scope—which connect these dimensions, and explores them in the specific context of the dependency of fiscal capacity on information capacity.

Third, we join scholarship on the importance of societal compliance in the creation of the fiscal state, but with a focus on elite compliance with the state’s information collection efforts, which was crucial to tax state development.