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Does Government Partisanship Influence Multinational Corporations’ Tax Payments in the United States?
Author(s) -
Shin Mi Jeong
Publication year - 2020
Publication title -
social science quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.482
H-Index - 90
eISSN - 1540-6237
pISSN - 0038-4941
DOI - 10.1111/ssqu.12779
Subject(s) - multinational corporation , politics , government (linguistics) , corporate tax , multilevel model , biology and political orientation , economics , payment , business , tax policy , public economics , tax avoidance , tax reform , finance , political science , law , linguistics , philosophy , machine learning , computer science
Objective Scholars have made conflicting predictions as to whether partisan politics influences taxes paid by multinational corporations (MNCs). The current study tests this question by examining the relationship between the partisan composition of government and tax rates that MNCs paid to their home country, the United States, using firm‐level data on financial information from the U.S. Fortune 1000 for the period 1986–2010. Methods I employ a multilevel regression model allowing for varying intercepts across firms and years as a way to model unobserved heterogeneity. Results I find no relationship between the partisan orientation of governing parties and the level of corporate taxes MNCs pay. Internationally mobile firms have lower effective tax rates than domestically operating firms. Conclusion This study suggests that the effect of partisan politics on corporate tax policy does not extend to the taxation of MNCs in the United States.