World Politics 56 (October 2003), 79–113 GLOBALIZATION AND CAPITAL TAXATION IN CONSENSUS AND MAJORITARIAN DEMOCRACIES By JUDE C. HAYS* A FTER surveying the research on international capital mobility and capital taxation in his recent book on globalization, Duane Swank concludes: “The weight of the evidence leads to the unantici- pated impression that international capital mobility may be unrelated (or even positively related) to capital taxation.” 1 This is arguably one of the most important and, as Swank notes, unexpected findings to come out of the literature on globalization. The debate over capital taxation, perhaps more than any other, clearly divides those who are pessimistic about the domestic political consequences of globalization and those who believe governments still have substantial room to maneuver in the global economy. While it may be reassuring to think that the tax constraints associ- ated with globalization are weak, this conclusion is often based on one of two problematic assumptions: (1) that globalization implies a race to the bottom in capital taxes or (2) that the tax systems of the social dem- ocratic corporatist countries are undermined the most by international capital mobility. Scholars who design their research on these assump- tions are either looking for the wrong thing or searching in the wrong places. I argue in this article that globalization will lead to (partial) cap- ital tax convergence—not to the bottom but to somewhere near the center of the existing distribution of capital tax rates. Moreover, the countries that are the most dependent on capital taxes are the ones that will feel the revenue pinch. These are the majoritarian democracies with liberal market economies not the social democratic corporatist countries. * An earlier version of this paper was presented at the annual meeting of the Midwest Political Science Association, Chicago, April 19–22, 2001. I thank John Freeman, Ethan Kapstein, Layna Mosley, Irfan Nooruddin, Clint Peinhardt, Diana Richards, and two anonymous referees for their helpful comments. 1 Duane Swank, Global Capital, Political Institutions, and Policy Change in Developed Welfare States (Cambridge: Cambridge University Press, 2002), 247.