Abstract

https://ssrn.com/abstract=2881496
 


 



Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation


Rafael Di Tella


Harvard Business School - Business, Government and the International Economy Unit; National Bureau of Economic Research (NBER)

Juan Dubra


University of Montevideo - Department of Economics

Alejandro Lagomarsino


Harvard University

December 6, 2016

Harvard Business School BGIE Unit Working Paper No. 17-046

Abstract:     
We analyze the role of people’s beliefs about the rich in the determination of public policy in the context of a randomized online survey experiment. A question we study is the desirability of government-private sector meetings, a variable we argue is connected to State capacity. Survey respondents primed with negative views about business leaders want fewer meetings, as well as higher taxes to the top 1% and more regulation. We also study how these effects change when subjects are (additionally) primed with positive/negative views about government officials. Distrust in the government increases the preferred tax rate on the top 1% only when business legitimacy is low. A model with multiple equilibria helps interpret these findings. In one of the equilibria, meetings are allowed, business legitimacy is high, and people set a low income tax rate for businesspeople. In the other, meetings are forbidden, business legitimacy is low, and people set high taxes to punish the businesspeople for their corrupt behavior.

Number of Pages in PDF File: 68

Keywords: Business Legitimacy, State Capacity, Meetings, Taxes, Top 1%, Regulation.


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Date posted: December 6, 2016  

Suggested Citation

Di Tella, Rafael and Dubra, Juan and Lagomarsino, Alejandro, Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation (December 6, 2016). Harvard Business School BGIE Unit Working Paper No. 17-046. Available at SSRN: https://ssrn.com/abstract=2881496

Contact Information

Rafael Di Tella (Contact Author)
Harvard Business School - Business, Government and the International Economy Unit ( email )
Cambridge, MA
United States
617-495-5048 (Phone)
617-496-5985 (Fax)
HOME PAGE: http://www.people.hbs.edu/rditella/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Juan Dubra
University of Montevideo - Department of Economics ( email )
Prudencio de Pena 2440
Montevideo, CP 11600
Uruguay
5982 707 4461 (Phone)
HOME PAGE: http:\\www2.um.edu.uy\dubraj
Alejandro Lagomarsino
Harvard University ( email )
1875 Cambridge Street
Cambridge, MA 02138
United States
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