Although the relationship between democratic rule and income inequality has received important attention in recent literature, the evidence has been far from conclusive. In this paper, we explore whether the redistributive effect of democratic rule is conditional on state capacity. Previous literature has outlined that pre-existing state infrastructural power may be necessary for redistributive policies under democratic rule. In contrast to that intuitive view, this study argues that democratic rule combined with high state infrastructural power produce higher levels of income inequality through their positive effects on investor confidence, foreign direct investment inflows, and financial development, which favor income concentration at the top. By making use of a novel measure of state capacity based on cumulative census administration, this research finds empirical support for these claims using data from 184 industrial and developing countries between 1971-2016.