Tax Expenditures, Philanthropic Organizations, and Welfare State Reforms. An Analysis of Parliamentarian Debates on Public Utility and Philanthropic Foundations in Switzerland

This paper looks at the role of fiscal policies in promoting the role of private actors such as philanthropy organizations for executing tasks of public utility. Over the past decades, neoliberalism has questioned the scale of the welfare state; political, economic and financial crises have further eroded state capacity and social policies. In these times of retrenchment, foundations, benefiting from favorable taxation, have been praised as efficient actors in complementing or substituting welfare states. Since the 1990s, all European countries have embarked on a series of reforms to promote philanthropy. Tax policies and fiscal tools are crucial in regard to the question (Reich 2010): states give tax expenditures for public utility when philanthropic foundations benefit from tax breaks, which has been described as fiscal welfare (Morel, Touzet and Zemmour 2016) or the "Hidden Welfare State" (Howard 1993). In the paper, we study the political debates on the question of public utility recognition and on tax legislations related to the involvement of private fortunes or organizations in social policies in Switzerland. Using a political sociology perspective, with a special attention for the role of politics and ideas in shaping the reform process, we study the policy debates with regard to philanthropy and fiscal expenditures at the federal level and in three cantons. Who intervenes in these debates? How does the conception of what public utility is evolve? And what do these debates tell us on the welfare mix and his evolutions? The study uncovers the political, ideological, regional and economic arguments and shows how different political contexts lead to different uses of tax expenditures and different legitimacies of fiscal tools. The study is based on an analysis of parliamentary debates and on around 40 interviews with parliamentarians, tax administrators, and representatives from the executive branches of regional governments. Reich, R. (2010). Toward a political theory of philanthropy. Giving well: The ethics of philanthropy, 177–95. Morel N., Touzet C., Zemmour M., 2016. Fiscal Welfare and Welfare State Reform: A Research Agenda. LIEPP Working Paper, 45. Howard, Christopher (1993). « The Hidden Side of the American Welfare State », Political Science Quarterly, Vol. 108, No. 3 (Autumn, 1993), pp. 403-436