Jason Koski/University Photography

Gustavo Flores-Macias, professor of government, has studied the Colombian security tax, a levy on the economically elite that finances public safety.

Growing up in Latin America at a time of drastic economic reforms wasn’t easy, according to Gustavo Flores-Macías.

Those reforms included privatization, trade and financial liberalization, and the elimination or reduction of government subsidies, all of which carried what Flores-Macías refers to as “distributive consequences.”

Flores-Macías, assistant professor of government in the College of Arts and Sciences, says these youthful experiences triggered his interest in the politics behind economic reforms. His work as the director of public affairs in Mexico’s Consumer Protection Agency before coming to Cornell gave him another perspective on the effects of policy decisions on citizens.

“Working for the federal government in Mexico was valuable because it helped me appreciate the disconnect that exists between technical solutions that are good in theory, and the reality on the ground,” says Flores-Macías. “Some solutions may work well on paper, but are very difficult to implement in practice because they do not take into account political considerations. Governments can only do as much as their human and material resources allow them to.”

Flores-Macías’ research focuses on the politics of economic reform, and taxation and state capacity. Recently he examined Colombian security taxes in the paper, “Financing Security through Elite Taxation: The Case of Colombia’s Democratic Security Taxes,” published in Studies in Comparative International Development in December 2014.

“The Colombian security taxes drew my attention because it is a successful case of reform, but with a public-safety twist that has become increasingly relevant for the rest of region, which now has the highest levels of violent crime in the world,” he says.

Taxes on the economic elite are a means to finance public safety expenditures in countries experiencing high or rapidly deteriorating rates of violent crime and where wealth is highly concentrated. Similar efforts have already been adopted in Costa Rica and Honduras, and there are proposals to do the same in Guatemala and El Salvador, says Flores-Macías.

Successfully raising taxes on the economic elite, though, has not been easy, says Flores-Macías.

“Economic elites are the sector that enjoys greater ability to influence government decisions and tend to have the means to circumvent tax obligations both legally–through political influence, lawyers and accountants–and illegallythrough off-shore tax havens.”

His paper examines the factors that made the Colombian elite tax possible – a combination of fiscal and security crises, cohesion among business and government elites, and improving perceptions of the government's provision of public safety.

Flores-Macías hopes his findings will “inform efforts in the developing world, where low levels of fiscal extraction, deteriorating security conditions and mounting public safety expenditures are common. Although other countries may have different circumstances, there is much to learn from the successful strategies followed in the Colombian case.”

Flores-Macías is working on a new book, "Financing Leviathan: Rule of Law, Taxation, and State Building in Latin America," in which he explores the question of when and under what conditions governments and elites become partners in the state-strengthening enterprise. He is also working on a project that examines the conditions that might lead the general public to support fiscal reforms.

Quinn Cullum is a writer intern at the College of Arts and Sciences. Linda B. Glaser contributed to the story.