Does Independent Political Spending Affect State Tax Policies, Revenues and Expenditures?

59 Pages Posted: 27 Apr 2022

See all articles by Alisa Tazhitdinova

Alisa Tazhitdinova

University of California, Santa Barbara (UCSB)

Sarah Robinson

University of California, Santa Barbara (UCSB)

Date Written: April 13, 2022

Abstract

We study to what extent U.S. state tax policy, tax revenues and expenditures are affected by independent political contributions. Using the Citizens United v. Federal Election Commission ruling for identification, we study tax policy outcomes in states where independent spending by corporations and/or unions on political campaigns was suddenly allowed, compared to unaffected states. Ten years after the ruling and for a wide range of outcomes, we are not able to identify economically or statistically significant effects of unlimited independent political contributions on tax outcomes. While our results do not rule out the possibility of changes in tax handouts on a firm-by-firm basis, such effects are not large relative to the regular fluctuations of state tax rates, revenues or expenditures.

Keywords: campaign finance, political contributions, Citizens United, independent spending, state taxes, state revenues, state expenditures

JEL Classification: D72, H20, H71, H72

Suggested Citation

Tazhitdinova, Alisa and Robinson, Sarah, Does Independent Political Spending Affect State Tax Policies, Revenues and Expenditures? (April 13, 2022). Available at SSRN: https://ssrn.com/abstract=4083336 or http://dx.doi.org/10.2139/ssrn.4083336

Alisa Tazhitdinova (Contact Author)

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

Sarah Robinson

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

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