Talk:Fiscal capacity

This article is or was the subject of a Wiki Education Foundation-supported course assignment. Further details are available on the course page. Student editor(s): Vivianliu94 (article contribs). Peer reviewers: Mfekade1366, Shenqiu92.

Some comments

Hi, Vivianliu94. Thanks for writing this article. I think you've got a lot of important information here and you've covered (what seems to me to be) a good outline of the topic. My only major recommendation is that you simplify some of the sentences, especially in the latter paragraphs. I know this is a complex topic and it is important to fairly and precisely represent the voices on it, but compound-complex sentences--like the snarl of one I'm navigating now--can make it harder for a reader to get a comfortable handle on the topic.

I would also recommend condensing and reframing the article to focus on what you want the reader to come away with. I find this helps a bit: look at each of your paragraphs and try to determine the core ideas you need to get across to your audience. Let's take the two paragraphs starting from "Richer and more developed countries have larger..." as an example. I see:

• Richer countries can raise more revenue and this corresponds with a higher fiscal capacity.
• They can not only raise more money they can do so more efficiently for a variety of reasons
• Optimal taxation theory suggests that the kinds of taxes these states tend to raise are more efficient
• But this general theory has some problems, namely some obvious lurking variables.
  • rich countries have institutions which make certain forms of taxation contribute more or less to fiscal capacity

The next paragraph goes on to discuss the important and recent developments in that discussion but in doing so repeats some of the points above. I've broken the article out a bit. I hope the above helps. Let me know if you need more (or more specific) info. Adam (Wiki Ed) (talk) 18:54, 6 April 2016 (UTC)

Hi Adam (Wiki Ed). Thanks very much for your useful comments! I have one question on behalf of the class--how did you generate the "Find link" tool? We tried for instance, to search "https://edwardbetts.com/find_link/Jeffrey_Herbst" and nothing was available; is there a process to generate the 'find link tool results' for each article that it's used for? Please let me know. Thanks Vivianliu94 (talk) 15:02, 18 April 2016 (UTC)

I don't know anything about the tool you've linked, Vivianliu94; it's the first time I've seen it. What tool or function on Wikipedia are you referring to? Adam (Wiki Ed) (talk) 16:45, 18 April 2016 (UTC)

Hi Adam (Wiki Ed); This was added to the top of my page: "" The 'Find look tool' links to the edwardbetts.com tool that I mentioned earlier. Vivianliu94 (talk) 22:17, 19 April 2016 (UTC)

That tag was left by a bot, an automated script looking for pages with few incoming links from other articles to this one. I've never actually clicked on that find links tool in 8 years on wikipedia! All you have to do to clear that tag is insert links to this page where appropriate. You're a better judge of that than a bot, so I would ignore the output of that tool. If you're linking text already on the page, that's good. A sentence or clause to insert "fiscal capacity" should both have a reference and be germane to the article. Once you've wikilinked 2 or more pages to this one you can remove the tag yourself. Or, if you don't, the tag can stay on indefinitely with no impact on the article. It's there to alert someone reading it who is an editor that they can improve the encyclopedia as a whole by adding links. Adam (Wiki Ed) (talk) 14:52, 20 April 2016 (UTC)

Thanks Adam (Wiki Ed)! I have quite a few wikilinks throughout, so I think I'll remove the tag. Vivianliu94 (talk) 16:55, 21 April 2016 (UTC)

New Revision/Structure

I just made a revision to the framework/structure of the page on Fiscal Capacity, and added sections "Definitions and Patterns", "Fiscal Capacity in Practice (subsections: Administration, Tax Structure", and "Origins (subsection: War)". What remains is another subsection on Elites, and another section on Relationship to State Building. Notes on Elites and an overall structure are below:

1. Definitions and Patterns 2. Fiscal Capacity in Practice A. Administration B. Tax Structure 3. Origins Elites

• Scholars emphasize incentives and goals of elites to build state and fiscal capacity, and how the transition of power from elites to the general population influences fiscal capacity.
• Kaldor (1963) emphasizes the difference between development experts that focus on incentives rather than on resources.
• "What limits the ability to tax are incentive constraints tied to asymmetric information, or perhaps political motives, rather than the mere administrative capabilities of the state" (Besley & Persson, 2011). <br
• goals of elite are consistent with Johnson & Koyama's (2015) explanation of lessons learned from economic history in current public finance economics: "stronger fiscal and legal institutions can lead to economic development, [but] it is not so clear where the support for these institutions comes from initially. Frequently it is the private-order institutions--such as family alliances, religious organizations, or informal trade networks--which from the bases around which public-order institutions are eventually built." (Johnson & Koyama, 2015)

War 4. Relationship to State-building A. Coevolution with other things B. Relationship to democratization C. Relationship with Economic Development

Vivianliu94 (talk) 06:38, 18 April 2016 (UTC)

Peer Review Comments

Approaching this page as someone who doesn't understand economics at all and who almost failed Principles of Econ, most of my critique about the page comes from not understanding some concepts or phrases, like deadweight loss.

Changes I made throughout the page

• tried to break up sentences and make the page sound less academic, and more accessible
• added links to other wiki pages. I found that there were certain phrases that I had to google to understand and through googling I found their wiki pages and linked those phrases to their respective wiki page. Instead of you having to explain these concepts, I thought I would be easier to link to these concepts, so that if someone doesn't understand a phrase or concept they can click on the link.
• I added citation needed throughout the page. I noticed that when you reference something for the second time, you don't cite your source. For example, in Definitions and Patterns you write "In addition to generating increased revenue levels, rich countries tend to rely more on the personal income tax and consumption taxes, whereas poorer countries rely on less efficient tax types, such as corporate income taxes, tariffs, and seignorage" and you cite your source. Further on in the page, you write "Developed countries and states with strong fiscal capacity tend to rely on these efficient, broad-based taxes, whereas the reverse holds true for developing countries" and do not include a citation.

Lead Section Great introduction to the topic. I felt like your lead followed Wikipedia lead guidelines. I just thought you could give examples of when taxes are not the government's only source of revenue. I wrote a sentence stating that foreign aid is an example, but I couldn't think of any other examples.

Definitions and Patterns

• I separated Definitions and Patterns to two sub groups to make it easier for someone reading wikipedia to skim. I also moved your "conclusion" sentence at the end of Definitions and Patterns to the beginning of the Patterns section because I thought it was a nice overview of what you are going to write about.
• Could you explain what "large distortions in relative prices" means?
• Found this reading online that studies the evolution of fiscal capacity in the long-run and argues that 3 types of state exist in the long-run in terms of their fiscal capacity. I think including this piece in the Definitions section would be a good idea.

Administration

• How and why are income taxes easy to evade?
• What do you mean by "low incidences"?
• It would be great if you gave an example of a "functioning" information system. I imagine that the IRS would be an example of one. For example, how does the IRS create a system of rewards and penalties to encourage tax compliance? What are the rewards and penalties?
• You should expand on the last sentence. How exactly does the social and political environment of the state determines compliance.

Tax Structure Felt like you were repeating arguments that you wrote about in the Patterns section, namely, how inefficient tax types and informal economies create low fiscal capacity. I would create a patterns section within Tax Structure and move the relevant sections from Definitions and Patterns to Tax Structure.

Origins Expand on Olson's theory and be explicit on how it relates to fiscal capacity.

Moving From an Orphan Page I complied a list of articles where you should link your article to.

Ideas for Expansion

i think that your main focus in our final week should be to add more social science to this page. Here are a couple of suggestions on how to do it and readings you can use.

Origins: War

• de la Sierra, Raúl Sánchez. 2015. “On the Origin of States: Stationary Bandits and Taxation in Eastern Congo.” Working paper.
• provide more examples on current social science that reaffirms Tilly's theory. For balance, find people who critique Tilly's theory.

Solutions to Weak Fiscal Capacity You mention how informal economies, low-tax morale, low-quality governance, and insufficient resources for large, administrative tax structures create weak fiscal capacity in states. While reading that sentence, I started wondering if there were solutions to weak fiscal capacity. I thought that our Herbst reading from our class, would be a good resource. I also found some other sources as well.

Herbst, Jeffrey. "War and the State in Africa." International Security (1990): 117-139.

Foreign Aid and Weak Fiscal Capacity The argument is that aid creates weak fiscal capacity by allowing countries to receive revenue through aid organizations and foreign governments, rather than taxes. Now, countries are being held accountable to foreign governments and aid organizations, rather than to its people. Here are some papers that I've found that would help:

• Gupta, S., B. Clements, E. Baldacci, and C. Mulas-Granados (2005). Fiscal policy, expenditure composition, and growth in low-income countries. Journal of International Money and Finance 24 (3), 441 – 463.

• Moss, T., G. Pettersson, and N. van de Walle (2008). An aid-institutions paradox? a review essay on aid dependency and state building in subsaharan africa. In W. Easterly (Ed.), Reinventing Foreign Aid. Cambridge, MA: The MIT Press

• Clist, P., and O. Morrissey, 2011, “Aid and Tax Revenue: Signs of a Positive Effect since the 1980s,” Journal of International Development, 23, pp. 165–80.

• Foreign Aid and Revenue: Still a Crowding Out Effect?, IMF Working Paper

Mfekade1366 (talk) 21:17, 24 April 2016 (UTC)