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Lobbying and Taxes
Author(s) -
Richter Brian Kelleher,
Samphantharak Krislert,
Timmons Jeffrey F.
Publication year - 2009
Publication title -
american journal of political science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 6.347
H-Index - 170
eISSN - 1540-5907
pISSN - 0092-5853
DOI - 10.1111/j.1540-5907.2009.00407.x
Subject(s) - corporate tax , public economics , government (linguistics) , politics , monetary economics , business , economics , tax policy , value added tax , tax reform , tax avoidance , political science , linguistics , philosophy , law
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.