🚨New working paper🚨.“The Political Costs of Taxation” with.@EnguehardJoseph & @IgorKol52824963. When a state has low capacity and legitimacy, attempts to enforce unfair taxation can fuel social conflict!. Some key findings:.🧵 1/10.

RT @S_Stantcheva: Ever feel like everything online is getting angrier? You’re not imagining it. Tweets with anger have surged since 2013, w….

RT @silviavannutell: We are back for #BSESummerForum Public Economics workshop Co-organized with @Amedeo_Piolatto, @LVSalvadori @pierrecboy….

RT @silviavannutell: And that’s a wrap on the #BSESummerForum Public Econ workshop! 💥Huge thanks to all the amazing presenters, discussants….

RT @LVSalvadori: @EvaDavoine presents at the @FundacioIEB–@taxobservatory Workshop: “The Political Costs of Taxation” Enforcing the salt ta….

A special mention to @CedricChambru for connecting us and initially collecting the conflict data, and to @victorgayeco for collaborating on establishing the precise location of the salt tax internal border—forthcoming companion paper!.

Our preliminary draft can be downloaded here: We particularly thank @guoxu_econ, @xftrebbi, @JonathanWeigel, @MatCoutt, Ernesto Dal Bó, Davide Cantoni, Reed Walker, Jean-Pascal Bassino for their inputs and guidance.

Beyond this historical context, our findings resonate with current issues: raising taxes can lead to political backlash in states with weak fiscal capacity and legitimacy—sometimes even in established fiscal states, as evidenced by the recent French Yellow Vest protests! 🧵10/10

Government revenue would have decreased by 13%. Since this tax reform was not implemented, we infer that enduring the conflicts was less costly for the French state than eliminating them. We thus interpret this result as an upper bound on the political cost of taxation. 🧵9/10.

What would have been the impact on government revenue if the price of salt in the high-tax region had been reduced to the highest conflict-free price? We use a methodology from a top finance official of the time, Jacques Necker, to derive a counterfactual revenue. 🧵 8/10

We find that the effect of tax enforcement on conflict increases with salt price differences at the border. This relationship allows us to determine the highest price differential that does not trigger conflict. 🧵 7/10

These conflicts persisted until the French Revolution, when the salt tax was finally repealed. In 1789, it was also by far the most contested tax in popular grievances—especially in the high-tax region! 🧵7/10

The reform led to a 20-fold increase in salt smuggling conflicts in the high-tax region: not just direct confrontations between smugglers and tax agents, but the local population also standing with the smugglers against state repression! 🧵6/10

Using a difference-in-discontinuities design, we compare the number of conflicts related to salt smuggling on both sides of the fiscal border before and after the tax enforcement reform. We find that conflicts increased significantly more in the high-tax region. 🧵5/10

Amid heightened military competition and the need for additional revenue, the French state sought to crack down on salt smuggling around 1740 by establishing special courts to prosecute smugglers. 🧵 4/10.

The French state relied heavily on the salt tax (gabelle), which caused salt prices to vary dramatically across regions. This disparity led to widespread illicit salt smuggling from lower-tax regions to the high-tax central region. 🧵3/10

We consider the fascinating setting of early modern France: a low-capacity state attempting to raise revenues, despite significant heterogeneity in the tax system, rooted in historical provincial privileges .🧵 2/10.

RT @cepr_org: The final session of insightful poster presentations by young scholars at #CEPRParis2024. 📸@EnguehardJoseph @ENSdeLyon, @EvaD….

@UCBerkeley @Stanford @saumjha

The DevPEC Conference will take place on April 18-19 this year!. A great opportunity to present your work and get feedback from @UCBerkeley & @Stanford peers & faculty. Keynote speaker is Professor Saumitra Jha @saumjha!. Submit your work by Feb 11th, link below!. #EconTwitter