This paper is concerned with income taxation in non-democratic states. The increase of government tax revenue in the last two centuries has often been explained by war- fare, redistribution, and democratization. Little attention has been paid to taxation in non-democratic states, and in particular to differences within this group of countries. This paper seeks to fill this gap by developing an argument focusing on taxation as an investment in fiscal capacity and not as a means of redistribution. Among countries not considered fully democratic there are important differences in the level of contestation, participation, and concentration of power, all of which have an impact on tax policy. In particular, contestation and power-concentration affects the possibility to overcome commitment problems associated with investments in fiscal capacity. This capacity can be useful even for wealthy elites, but only if they can share political power. The argument generates novel predictions about the link between political organization within non-democracies and the rise of the fiscal state. Empirically, I test these predictions by using several new, high quality, historical datasets over political institutions, the introduction of taxes, and government tax revenue.
