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<jats:p>Inequality is unequally distributed across the territory, and national averages obscure this variation. Pockets of very high inequality persist at the subnational level of government, even when national governments implement large scale redistributive policies. This study investigates which factors at the subnational level may help explaining differences in income inequality across units. The main claim is that in subnational units where local economic elites capture provincial states by occupying relevant positions in their governments have lower taxes on land, spend less in social programs, have more repression of federal labor rights, and, as a consequence, have higher inequality. The study uses a large-N analysis of original panel data for Argentina, presents a comparative study of two cases, and explores some comparative implications in the conclusions.</jats:p>