Wealth Bias in Tax Policy-Making: Election Promises and Actual Tax Policies in the UK and Germany

This paper examines whether policy-making processes exhibit a pro-wealth bias. We focus on tax policies, a type of policy in which the wealthy have particularly strong stakes. We investigate potential bias in the post-electoral phase by studying whether the tax policies actually implemented by governments are more favorable to the wealthy than the tax policies promised in the manifestos of the parties in the winning coalition. We construct a novel and exhaustive database that matches tax policy proposals in party manifestos to tax policies actually implemented, drawing on the Manifesto Project and OECD Economic Surveys for Germany and the UK from the 1990s to the 2020s. We code the progressivity of each tax proposal and each implemented tax policy. To assess progressivity, we systematically identify and synthesize secondary literature that estimates the position of the citizens affected by the policy in the income distribution. Our analysis contributes to the unequal responsiveness literature, which shows that policies tend to align more closely with the preferences of better-off citizens. We add to this literature in two ways: first, by estimating the bias of policies relevant to the wealthy (whereas existing work typically operationalizes better-off citizens as upper-middle-class voters around the 90th percentile); and second, by providing insight into the post-electoral mechanisms that exacerbate wealth bias in the translation of electoral promises into actual policies.