The Political Economy of Corporate Taxation

Williams, John T.; Collins, Brian K.

doi:10.2307/2111714

Cited by 25 publications

(25 citation statements)

References 44 publications

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“…In an aggregate analysis of effective corporate tax rates for the period 1954 to 1987, Quinn and Shapiro use as an independent variable, the proportion of PACs sponsored by corporations, and find that the larger the proportion of business PACs, the lower the aggregate taxes on business (1991,862). In contrast, Williams and Collins (1997) present results showing that business PACs as a whole do not influence taxes. They argue that business is not a unified political actor and is instead characterized by industries and firms seeking particularistic interests: "Many changes in the corporate tax code have a significant distributive component.…”

Section: Businesscontrasting

confidence: 90%

Futility and Free-Riding: Corporate Political Participation and Taxation Rates in the United States

Drope

Hansen²

2008

Bus. polit.

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While there is a strong theoretical foundation for the relationship between business sectors' political spending and the policy benefits that they receive, the empirical support for it is mixed. We use the logic of this exchange to examine a policy area that directly and significantly affects all businesses, and is thus a most likely case, taxation. Using principally firm-level tax rates of a large random sample of U.S. corporations for the 1998–2005 time period, we determine whether lobbying has measurable effects on firm-level tax rates. Contrary perhaps to popular belief, or at least anecdotal illustration, we find after controlling for firm size and industry-level tax rates, among other controls, that there is no discernible effect of political spending on firm-level taxation: firms that spend more in an effort to affect policy generally or tax policy specifically are no more likely to benefit from lower tax rates. We also examine the possibility that firms in the same industry coordinate efforts to affect tax rates. While we find limited evidence that firms occasionally coordinate within industries – or at least lobby simultaneously – to affect tax rates, perhaps more importantly, we determine that free-riding by smaller firms at the expense of the largest firms is rampant.

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Section: Businesscontrasting

confidence: 90%

Futility and Free-Riding: Corporate Political Participation and Taxation Rates in the United States

Drope

Hansen²

2008

Bus. polit.

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“…9 Nonetheless, we still do not understand completely what role political influence plays in determining why some firms pay lower taxes. Studies of aggregated PAC spending and taxes have turned up mixed results (Quinn and Shapiro 1991;Williams and Collins 1997). 10 The absence of explicit data on lobbying has meant that existing firm-level studies proxy political influence with second-best measures of firms' political activities.…”

Section: Related Literaturementioning

confidence: 99%

Lobbying and Taxes

Richter¹,

Samphantharak²,

Timmons³

2009

American J Political Sci

310

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Lobbying dominates corporate political spending, but comprehensive studies of the benefits accrued are scarce. Using a dataset of all U.S. firms with publicly available financial statements, we delve into the tax benefits obtained from lobbying. Firms that spend more on lobbying in a given year pay lower effective tax rates in the next year. Increasing registered lobbying expenditures by 1% appears to lower effective tax rates by somewhere in the range of 0.5 to 1.6 percentage points for the average firm that lobbies. While individual firms amass considerable benefits, the costs of lobbying-induced tax breaks appear modest for the government.

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“…20 20 Exceptions occur when analysts estimate VAR models and VECMs and report impulse response functions and variance decomposition. See, for example, Williams (1990) and Williams and Collins (1998). …”

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confidence: 99%

Taking Time Seriously

Boef

Keele

2008

American J Political Sci

777

584

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Dramatic world change has stimulated interest in research questions about the dynamics of politics. We have seen increases in the number of time series data sets and the length of typical time series. But three shortcomings are prevalent in published time series analysis. First, analysts often estimate models without testing restrictions implied by their specification. Second, researchers link the theoretical concept of equilibrium with cointegration and error correction models. Third, analysts often do a poor job of interpreting results. The consequences include weak connections between theory and tests, biased estimates, and incorrect inferences. We outline techniques for estimating linear dynamic regressions with stationary data and weakly exogenous regressors. We recommend analysts (1) start with general dynamic models and test restrictions before adopting a particular specification and (2) use the wide array of information available from dynamic specifications. We illustrate this strategy with data on Congressional approval and tax rates across OECD countries.

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The Political Economy of Corporate Taxation

Cited by 25 publications

References 44 publications

Futility and Free-Riding: Corporate Political Participation and Taxation Rates in the United States

Futility and Free-Riding: Corporate Political Participation and Taxation Rates in the United States

Lobbying and Taxes

Taking Time Seriously

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