Lobbying and Taxes
Brian Kelleher Richter
University of Texas at Austin - Red McCombs School of Business
University of California, San Diego - School of International Relations and Pacific Studies
Jeffrey F. Timmons
IE Business School
October 22, 2008
American Journal of Political Science, Vol. 53, Issue 4. p. 893-909
Lobbying dominates corporate political spending, but comprehensive studies of the benefits accrued are scarce. Using a dataset of all US 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.
Number of Pages in PDF File: 37
Keywords: Lobbying, Taxes, Money in Politics, Corporate Political Activity, Political Economy
JEL Classification: D72, H22, H25, K34, M21
Date posted: January 10, 2008 ; Last revised: December 10, 2011
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