| Summary: | The writer discusses the capacity of the state in Latin America to raise revenues, including income tax, from the population, which is essential to the state's ability to deliver public services or redistribute wealth. He attempts to demonstrate how the high concentration of economic and political power in Latin America stunts fiscal state capacity by formalizing the channels linking inequality to state capacity and providing supportive empirical evidence. He explains how investment in state capacity is deterred by the superior income and political power of the group making the decision compared to the rest of the population, and the fear of losing power in the future and of state capacity ending up in the hands of the opposition. The writer also considers other potential determinants of state capacity.
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