Can lower tax rates be bought? Business rent-seeking and tax competition among U.S.States
Bob Chirinko () and
Daniel Wilson ()
No 2010/2, Working Papers from Institut d'Economia de Barcelona (IEB)
The standard model of strategic tax competition assumes that government policymakers are perfectly benevolent. We depart from this assumption by allowing policymakers to be influenced by the rent-seeking behavior of businesses. Campaign contributions may affect tax competition and enhance or retard the mobility of capital across jurisdictions. Based on a panel of 48 U.S. states and unique data on business campaign contributions, we find that contributions have a significant direct effect on tax policy, the economic value of a $1 business campaign contribution is nearly $4, the slope of the tax reaction function is negative, and the empirical results are sensitive to state effects.
Keywords: Campaign contributions; business taxation; state tax competition (search for similar items in EconPapers)
JEL-codes: H71 H73 H25 (search for similar items in EconPapers)
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Journal Article: Can Lower Tax Rates Be Bought? Business Rent-Seeking and Tax Competition Among U.S. States (2010)
Working Paper: Can Lower Tax Rates be Bought? Business Rent-Seeking and Tax Competition among U.S. States (2010)
Working Paper: Can lower tax rates be bought? Business rent-seeking and tax competition among U.S. states (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2010-2
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