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This thesis analyzes the case of the failed tax reforms in Guatemala, from 2006 to 2012, and contributes to understanding the power dynamics which have prevented the implementation of a more progressive tax system. This research explores how the structure and agency of the economic elites interplay to create institutions that shape exclusive tax negotiation processes and unequal tax decisions. More specifically, this research explores the formal and informal political institutions (institutionalized sources of power) which condition the tax negotiation processes in different spaces for tax bargaining (negotiation arenas), and its outcomes (tax policies)-while permanently excluding civil society from participating in tax negotiations. This thesis explores the structural and instrumental sources of power that support the veto capacity of the economic elites. Using power resource theory, as proposed by Tasha Fairfield (2015), complemented with a historical-institutional approach and a critical political economy perspective, this research contributes to explaining the way political institutions and decision-making mechanisms operate to preserve the privileges of small groups while preventing significant progressive changes to the tax system. The main sources of veto power identified refer to the relationships of the economic elites with the decision makers and elected politicians, which have been institutionalized through formal and informal means. Additionally, these mechanisms for state-elite interaction are sustained by a series of institutionalized resources such as elite cohesion, tax expertise, media access, and violence, which are rooted in economic elites' structural (economic) power and therefore self-reinforce sources of power. However, different from Fairfield's approach, this thesis also explores the institutional mechanisms that limit or veto the participation of other social forces in tax negotiations. Moreover, it avoids the general assumption that more taxation necessarily leads to representation. Building on the insights of Will Prichard (2015), based on evidence from Sub-Saharan African countries, this thesis explores when and whether tax policies improve democracy (or not). In context of extreme state fragility where institutions of liberal democracy are weak, political will, economic resources, and violence are fundamental variables to explain tax progressivity or lack of it. Most importantly, non-democratic institutions appear as fundamental mechanisms framing and conditioning tax decisions. On that basis, I argue that the Guatemalan state is weak by design.