Leonard Seabrooke innovation on credit,property and taxes for LIGs.Such institutional changes were reliant on processes of contestation,redistribution and propagation.Critically, 1sn6n these processes benefited many LIGs even though,due to the social construction of what was legitimate within the financial reform nexus,they also encouraged the economic abandonment of the most economically vulnerable and structurally dis- advantaged in society.In short,changes to the financial reform nexus redistributed of assets and access overwhelmingly to the most entrepreneurial of LIGs,those who were nearly there'in terms of accessing credit and property,and therefore viewed as deserving of tax breaks. To trace the dynamics of the US case we can start by understanding the limits to an overt rentier shift in the 1980s.The first administration of Ronald Reagan attempted a rentier shift despite a clear absence of support from LIGs for changes to the financial reform nexus.6!For example,tax reforms in 1981 pro- vided not only a 23 per cent income tax to the wealthy but also a deduction of pay- ments on non-owner-occupied residential and commercial mortgage interest 益 payments from income tax assessment.62 These changes were made to increase rental housing and were associated with the kind of rentier landlordism rejected by LIGs in the English case.During this same period,financial system legislation permitted individual ownership of Savings and Loans banks(S&Ls),which then encouraged financial institutions to be used for speculative purposes,sending the entire system (especially in Texas and California)into crisis.3 Domestically, on tax,property and credit,the early years of the first Reagan administration pro- vided a sharp rentier shift. The above changes could be interpreted as institutional responses to changing conditions in the international political economy.For example,the Debt Crisis of the early 1980s was,in part,a consequence of US domestic stagflation as commer- cial banks lent excessively through syndicated loans to EMEs (with the epicentre of the crisis in Latin America).4 US commercial banks complained that US governments had encouraged them to borrow as 'a matter of public interest' and sought potential access to taxpayer monies for bail-out funds.5 In response, taxpayer advocacy groups argued that taxes should not be used to compensate banks for their 'bad bets'to sovereign debtors.As a consequence of contestation over this potential redistribution of assets,legislation was put in place to block tax- payer-funded 'bail-outs'and to punish banks with high non-performing loans from EME governments.This signalled a shift towards the use of debt securities rather than conventional bank loans within the USA,and in how the USA engaged the international financial order.The 1984 Secondary Mortgage Market Enhancement Act supported this change by encouraging a more liquid secondary market for the supposedly safest of income streams-people paying off their home mortgages.6 Given these financial and policy innovations,both which were diffused among, and supported by,LIGs,the momentum of the first Reagan administration's rentier shift was being slowly reversed. US tax politics While one would not normally associate the second Reagan administration with progessive taxation,reforms established in 1986 were 'not consistent with the 8Downloaded By: [University of Sydney] At: 02:46 7 August 2007 innovation on credit, property and taxes for LIGs. Such institutional changes were reliant on processes of contestation, redistribution and propagation. Critically, these processes benefited many LIGs even though, due to the social construction of what was legitimate within the financial reform nexus, they also encouraged the economic abandonment of the most economically vulnerable and structurally dis￾advantaged in society. In short, changes to the financial reform nexus redistributed of assets and access overwhelmingly to the most entrepreneurial of LIGs, those who were ‘nearly there’ in terms of accessing credit and property, and therefore viewed as deserving of tax breaks. To trace the dynamics of the US case we can start by understanding the limits to an overt rentier shift in the 1980s. The first administration of Ronald Reagan attempted a rentier shift despite a clear absence of support from LIGs for changes to the financial reform nexus.61 For example, tax reforms in 1981 pro￾vided not only a 23 per cent income tax to the wealthy but also a deduction of pay￾ments on non-owner-occupied residential and commercial mortgage interest payments from income tax assessment.62 These changes were made to increase rental housing and were associated with the kind of rentier landlordism rejected by LIGs in the English case. During this same period, financial system legislation permitted individual ownership of Savings and Loans banks (S&Ls), which then encouraged financial institutions to be used for speculative purposes, sending the entire system (especially in Texas and California) into crisis.63 Domestically, on tax, property and credit, the early years of the first Reagan administration pro￾vided a sharp rentier shift. The above changes could be interpreted as institutional responses to changing conditions in the international political economy. For example, the Debt Crisis of the early 1980s was, in part, a consequence of US domestic stagflation as commer￾cial banks lent excessively through syndicated loans to EMEs (with the epicentre of the crisis in Latin America).64 US commercial banks complained that US governments had encouraged them to borrow as ‘a matter of public interest’ and sought potential access to taxpayer monies for bail-out funds.65 In response, taxpayer advocacy groups argued that taxes should not be used to compensate banks for their ‘bad bets’ to sovereign debtors. As a consequence of contestation over this potential redistribution of assets, legislation was put in place to block tax￾payer-funded ‘bail-outs’ and to punish banks with high non-performing loans from EME governments. This signalled a shift towards the use of debt securities rather than conventional bank loans within the USA, and in how the USA engaged the international financial order. The 1984 Secondary Mortgage Market Enhancement Act supported this change by encouraging a more liquid secondary market for the supposedly safest of income streams – people paying off their home mortgages.66 Given these financial and policy innovations, both which were diffused among, and supported by, LIGs, the momentum of the first Reagan administration’s rentier shift was being slowly reversed. US tax politics While one would not normally associate the second Reagan administration with progessive taxation, reforms established in 1986 were ‘not consistent with the Leonard Seabrooke 8