Taxation and Society in Twentieth-Century Argentina

We have many books on death in Latin American history, but surprisingly few on taxes. With proverbial inevitability, this appears to be changing. Putting aside technical studies of the tax reforms that swept the region after 1980, a handful of recent books have attempted to trace the longer-term history of taxation in specific countries, especially Mexico and Argentina, often as an adjunct to the analysis of fiscal policy and the problem of debt that has plagued Latin American states since independence. Given the weight of economic history in the field, one might expect taxes to have received more examination, but as José Antonio Sánchez Román frequently points out in this pioneering study, the subject never quite moved to the center of public debate or political agendas in twentieth-century Argentina. Always lurking below the surface of conflicts over government finances, economic development, and wealth redistribution, tax policies were more likely to trigger reaction than action on the part of Argentines, who largely agreed that a progressive income tax was the system best suited to advancing the modernization of their country, even as they fought tooth and nail to defend the interests of their particular economic sector. Sánchez Román thus undertakes the challenging task of simultaneously demonstrating the significance and insignificance of taxes in modern Argentine history.Though this study might best be classed as a political economy of tax policy, focusing on the causes and consequences of major tax reforms in 1924 – 25 (failed), 1932, 1942 – 43, and 1974, as well as the myriad piecemeal alterations of the tax code between 1946 and 1973, the author is ultimately interested in explaining how, despite its comparatively low rates of taxation, Argentina gradually developed into an “adversarial tax state” (p. 5), with high levels of evasion common since the middle of the twentieth century. Running alongside this central paradox is a second (though hardly subsidiary) one: Argentina had its most progressive tax system under the conservative military and pseudodemocratic regimes of the 1930s and early 1940s, not under the much more democratic governments led by the Radicals from 1916 to 1930 or by the populist Juan Perón from 1946 to 1955. In fact, the Radicals were unable to enact income tax legislation in the mid-1920s thanks to the opposition of provincial elites in the Argentine Senate, and the Peronists of the late 1940s held a “surprisingly ambiguous” attitude toward progressive taxation (p. 86), even introducing a number of regressive tax measures while pursuing the redistribution of wealth by other means. Adding further intrigue to this seeming reversal of roles between left and right, democracy and authoritarianism, the book shows that Socialists were among the most vocal early critics of the income tax, whereas industrialists saw it as an ally against the traditional use of low import tariffs as the major source of government revenue.To his credit, Sánchez Román seeks to resolve these paradoxes with a cultural-institutional argument based not on essential Argentine attributes but on the careful historical reconstruction of the interplay between state and civil society in a particular national context, where relative consensus and compliance toward specific policies gave way to recrimination and resistance toward others. At the core of his explanation, if not his evidence, is the issue of political legitimacy. He rightly shows that the payment of taxes rests in part on the consent of the taxpayers themselves, even when the state’s powers of collection are quite strong — as they were in Argentina, which had an effective national tax bureaucracy and a system of payroll deductions as early as the mid-1930s. (The United States, by comparison, only established such a system in 1943.) Since most Argentines already viewed the income tax as desirable before the 1930 coup, Sánchez Román interprets its subsequent implementation by the military government as a bid to lend legitimacy to a regime whose origins were antidemocratic. Though successful in the short term, the connection between authoritarianism and the income tax “was a sort of original stain for Argentina’s progressive taxation” (p. 11). Workers never saw it as a project connected with their interests; they paid little into the system and did not develop an identity as taxpayers. The income tax began to falter and evasion began to accelerate when middle- and upper-class Argentines withdrew their consent during the 1940s and 1950s, as they came to question the legitimacy of the state either for anti-Peronist ideological reasons or simply because the state no longer appeared to manage competing sectoral interests in an equitable manner free from special exemptions, privileges, and generalized corruption.Its argument aside, this book presents much more evidence for the short-term pragmatism behind specific tax policies and sectoral responses than for the broader attitudes Argentines held about state legitimacy. It is also full of useful statistical information, painstakingly culled from public records. Like any expedition into uncharted territory, it will provide an indispensible map and reference for future studies of this new Argentine enigma

Debt · Economic policy · Economics · Latin Americans · Modernization theory · Political economy · Political science · Politics · Tax policy · Tax reform · Law · Politics and Society in Latin America · Taxation and Compliance Studies