A short note on fiscal regimes and fiscal policy

There is a reasonable debate about how much taxes matter. Most economists would agree that taxes do matter. However, the way in which taxes matter is often not altogether clear. More often than not when discussing taxes the tendency is to concentrate on the short-term implications of tax policy. Economists, for the most part, ignore the historical issues associated with the rise of what Joseph Alois Schumpeter, in his essay on fiscal history, called the Tax State, an admittedly, as he noted, a pleonastic concept. Schumpeter was concerned with the long-term implications of what might be termed a tax regime, rather than tax policy.

Read the longer post here.