Breaking down ideas and institutions: the politics of tax policy in the USA and the UK

As the existing comparative policy literature suggests, both ideational and institutional analyses have clear analytical value in their own terms but, under many circumstances, it is the combination of the two perspectives that allows for a full understanding of policy trajectories. In this article we suggest that, to improve our understanding of how ideas and institutions interact to produce change, it is important to break down these two overly broad concepts. This is because beyond general arguments about how ‘ideas’ and ‘institutions’ interact, students of public policy should itemize ‘ideas’ and ‘institutions’ into more focused, and empirically traceable, subcategories while recognizing the changing and contingent nature of their interaction, over time. To illustrate this, we turn to the politics of tax policy in the United States of America and the United Kingdom, tracking developments from the rise of the New Right and an aggressive income tax cutting agenda, personified by President Reagan and Prime Minister Thatcher, through to the revived debate about the legitimacy of increasing taxes on those earning the highest incomes that emerged in the era of austerity that followed the Great Recession of 2008.