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Structural power is a critical variable that merits more extensive and more explicit attention in Latin American political economy and in comparative politics more broadly. Assessing structural power in conjunction with its counterpart, instrumental power, can provide strong leverage for explaining variation in policy outcomes that affect business interests. However, structural power must be carefully defined and operationalized in order to capture its core attributes and nuances. This task requires wedding the concept's "structural" underpinnings with policymakers' perceptions and anticipated reactions. Moreover, the relationship between structural power and instrumental power must be carefully theorized. While these concepts encompass distinct channels through which business exerts influence, the two types of power may be mutually reinforcing. I argue that business interests shape policy outcomes when either their structural power or their instrumental power is strong, yet business influence will be more extensive and more consistent when structural power and instrumental power are both strong. However, electoral incentives, and more importantly, popular mobilization, can counteract business power. I illustrate these theoretical points with a case study of Chile's 2014 tax reform proposal, a major policy initiative with important distributive consequences that received international press attention.

This article describes the Chilean tax system and analyzes the political context prevented regressive reforms to transform the system established during the dictatorship. Examines the formulation of tax policy after democratization and the strategies employed by the governments of the center-left coalition for the passage of incremental reforms. Finally, it shows that the political atmosphere changed after the student protests of 2011 and 2012, which made possible the adoption of more progressive tax reform proposed by President Bachelet in 2014. ; Este artículo describe el sistema tributario chileno y analiza el contexto político que impidió reformas que transformaran el regresivo sistema establecido durante el régimen dictatorial. Examina el proceso de formulación de políticas tributarias después de la democratización y las estrategias que emplearon los gobiernos de la coalición de centro izquierda para lograr la aprobación de reformas incrementales. Por último, muestra que el ambiente político cambió luego de las protestas estudiantes de 2011 y 2012, lo que hizo posible la aprobación de la reforma tributaria mucho más progresiva propuesta por la presidente Bachelet en 2014.

Increasing tax revenue is imperative for development and good governance in Latin America. Governments throughout the region experienced continued revenue needs in the aftermath of market-oriented tax reforms implemented in the 1980s and early 1990s, yet tax policy outcomes varied widely, across countries, over time and across tax policy areas. This study explains variation in governments' tax reform agendas and the fate of reform proposals in Chile, Argentina, and Bolivia by analyzing the power of business, a key actor in tax politics in highly unequal societies. Many taxes directly or indirectly affect profits, and business associations may defend the interests of upper-income individuals as well as corporations. The classic concepts of structural power and instrumental power elaborate distinct means of business influence. Structural power arises from a perceived threat that a policy will lead to inadequate investment via market signals. Instrumental power entails deliberate political actions. Sources of instrumental power include relationships with decision-makers and resources that help business pressure policymakers more effectively. When either type of power is strong, taxing elites will be difficult, and reforms that policymakers view as desirable may even be eliminated from the agenda. In Chile, strong instrumental power kept significant tax increases off the agenda. Weaker business power in Argentina gave governments more leeway to increase taxation at the cross-sectoral level, although some powerful sectors prevented tax increases with sector-specific impact. Bolivia is a rare case where business's substantial power was challenged by counter-mobilization on tax issues and a radical threat from popular sectors to the existing political and economic system.The analysis is based on 82 tax proposals embedded in 48 reform packages. Cases in which policymakers decided not to propose tax reforms they viewed as important are also examined. Primary data sources include interviews with high-level government and tax agency officials, politicians, and business leaders, as well as congressional records, newspaper articles, tax agency reports, and tax return statistics. This research provides insights on building state extractive capacity, which has received insufficient attention in political science. It also contributes to theory on business politics by specifying mechanisms through which economic elites influence policy in democratic societies, observable sources of their power, and government strategies that can attenuate their influence on taxation.

AbstractThis article examines efforts to increase taxation of highly concentrated, undertapped income and profits in Latin America in the aftermath of structural adjustment. Argentina has advanced further than Chile in two policy areas: corporate taxation, which taps firm-level profits; and tax agency access to bank information, which helps reduce income tax evasion. These outcomes are explained by drawing on the classic concepts of business instrumental power, which entails political actions, and structural power, which arises from investment decisions. In Chile, strong instrumental power removed reforms in both areas from the policy agenda. In Argentina, much weaker instrumental power at the cross-sectoral level facilitated corporate tax increases. Bank information access was expanded after Argentina's 2001 crisis weakened the financial sector's instrumental power and reduced structural power.