This paper argues that political elites may weaken fiscal capacity in anticipation of new groups coming to power. One such instance occurred in the Colonial Indian provinces, where incumbent political elites hollowed out tax capacity in anticipation of franchise expansion. While studies of intra-elite competition have focused on economic inequality as a key factor in shaping elite motivations, this paper argues that high-caste elites in this era, who were worried about their social dominance, weakened institutions in order to limit the ability of future elected lower castes to desegregate public goods to lower castes. As elite bureaucrats as well as local tax collectors, upper castes enabled tax avoidance and weakened the local bureaucratic machinery. Using a historical dataset from 1914-1925 and novel micro-level measures of land tax collection, tax avoidance, and the size of the bureaucracy, the paper demonstrates that fiscal capacity declined after franchise expansion in the districts with higher levels of inter-caste social inequality.
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