DO INSTITUTIONS REALLY MATTER - TAXATION IN INDUSTRIALIZED DEMOCRACIES

New institutionalism has emerged as one of the most prominent research agendas in the field of comparative politics, political economy, and public policy. This article examines the role of institutional variati on in political/economic regimes in shaping tax burdens in industriali zed democracies. An institutionalist model for tax policy variation is tested across the Organization for Economic Cooperation and Developme nt (OECD) democracies. Countries are conceptualized and statistically modeled in terms of majoritarian, shifting coalition, and dominant coa lition governments. Regression analysis and cluster analysis are used to statistically model cross-national tax burdens relative to the stre ngth of labor organization and party dominance in parliament. This stu dy finds that political and economic institutions are important in exp laining tax policy variation. Specifying the structure of political an d economic institutions helps to explain the size of the state in mode rn capitalist democracies. This article specifies and demonstrates whi ch institutions matter and how much they matter.