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IEB10-02_Chirinko+Wilson.pdf (607.13 KB)

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Working paper

Publication date

2010

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cc-by-nc-nd, (c) Chirinko et al., 2010
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116646

Can lower tax rates be bought? Business rent-seeking and tax competition among U.S. States

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Abstract

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.

Subject

Campanyes electorals, Anàlisi de dades de panel, Política fiscal

Subject (English)

Political campaigns, Panel analysis, Fiscal policy

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IEB (Institut d’Economia de Barcelona) – Working Papers

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CHIRINKO, Robert S. and WILSON, Daniel J. Can lower tax rates be bought? Business rent-seeking and tax competition among U.S. States. IEB Working Paper 2010/02. [consulted: 11 of August of 2026]. Available at: https://hdl.handle.net/2445/116646

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