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Race and Regionalism in the Politics of Taxation in Brazil and South Africa (Cambridge Studies in Comparative Politics)

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The title says it all: and with as much breadth. This is comparative politics at its best. Using two oddly similar nations, the study examines how political institutions incorporate identity determines state fiscal capacity. In doing so, Lieberman brings together solid scholarship in identity politics, public finance, and development to examine the divergent paths of the South African state and Brazil; the formers's success in establishes strong, direct tax institutions and the latter's fragmented failures in establishing a modern, progressive fiscal system. Whether you agree that race and regionalism are causal factors in state development, Lieberman succeeds in using taxation as a vehicle for understanding the political histories of the two societies.

The per capita growth and politicla histories of Brazil and South Africa make them odd bedfellows ripe for comparison. How the two states are socially divided is the crux of the book: racial identity was primary criteria of political participation in establishing the unified, white South African government that emerged out of the Boer Wars. In Brazil, politics focused explicitly around regionalism post-independence, quickly becoming the dominant characteristic of the federalist system. While race mattered extensively, regional identities (ESP. North versus South) dominated the political landscape. For Lieberman, how these National Political Communities (NPCs) were institutionalized determined how the state could tax elites.

Why did the content of the NPCs (whether race-based or regionally-based) matter so much? Lieberman posits a model of political community where the racially fragmented system of South Africa created a cooperative relationship between the white supremacist state and national elites. In propping up the bifurcated nation, elites cooperated extensively, complying with the states' desire to secure constant direct tax revenue through the World Wars and the 1970s economic crisis. In fact, what emerged was a platform for lower class whites to bargain with elites for public goods--as well as a welfare system that penetrated the poor, white class. In sum, a race-based NPC ironically meant a modern, progressive, efficient tax administration. One that lasted after the fall of apartheid as a vehicle for addressing historical wrongs.

Brazil's story was different. If anything, the South American country was posed to surpass South Africa in building a modern tax state. However, as Lieberman puts it, a lack of coherent national interests made "bargaining unstable," where conflicting geographic interests lobbied for slim regional gains. Moreover, regionalism meant little cross-class agreements as well, as working class movements worked hard to overcome parochialism. The result was a taxation system deemed unfair by everyone, particularly by the wealthy Southern areas. Regressive, indirect consumption became the most viable options under divided federalism, marked by ubiquitous tax avoidance.

By 1945 direct taxes collected as percent of GDP in South Africa was 6 times that of Brazil. After the 1970s total domestic taxes collected by South Africa surpassed Brazil and the two have diverged ever since. Lieberman contends that the fiscal capacity of the two states positioned them differently to absorb the 1970 crises, globalization, and subsequent democratic political transitions. He then extends his national political community model to encompass cross sectional variation for a sample set of countries. The story holds.

Race and regionalism is tightly argued, confronting alternative explanations and skillfully using secondary theory and primary source research. A solid read for scholars of identity politics, comparative politics, public finance, and fiscal sociology alike.