The political economy of taxation in Prussia, 1871-1914

This paper examines the political economy of taxation in the Bundesstaat of Prussia during the Kaiserreich period. It examines how different factors of production with different levels of relative mobility, organized roughly along party lines, interacted with one another on taxation issues. It pays particular attention to the institutional composition of the Prussian state and how the institutions affected the mix of taxes the state levied. In particular, several elements of Prussia's electoral system, including the use of a three-class system, the distribution of electoral districts, and an indirect vote, guaranteed that large agricultural landowners would hold most of the power in spite of increasing industrialization. The parliament therefore consistently changed the tax code to reduce the burden on large agriculture