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Lobbying and Taxes

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  • Brian Kelleher Richter
  • Krislert Samphantharak
  • Jeffrey F. Timmons

Abstract

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.

Suggested Citation

  • Brian Kelleher Richter & Krislert Samphantharak & Jeffrey F. Timmons, 2009. "Lobbying and Taxes," American Journal of Political Science, John Wiley & Sons, vol. 53(4), pages 893-909, October.
    • Handle: RePEc:wly:amposc:v:53:y:2009:i:4:p:893-909
    DOI: 10.1111/j.1540-5907.2009.00407.x
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    Cited by:

    1. Unsal, Omer & Hassan, M. Kabir & Zirek, Duygu, 2016. "Corporate lobbying, CEO political ideology and firm performance," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 126-149.
    2. Nadine Riedel & Martin Simmler, 2021. "Large and influential: Firm size and governments’ corporate tax rate choice," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 812-839, May.
    3. Yu.E. Labunets & I.A. Mayburov, 2020. "Relationship of Tax Burden and Firm Size in the Timber Industry in Russia," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 19(4), pages 458-487.
    4. Lambert, Thomas, 2015. "Lobbying on Regulatory Enforcement Actions: Evidence from Banking," HIT-REFINED Working Paper Series 28, Institute of Economic Research, Hitotsubashi University.
    5. Irlacher, Michael & Unger, Florian, 2018. "Effective tax rates, endogenous mark-ups and heterogeneous firms," Economics Letters, Elsevier, vol. 173(C), pages 51-54.
    6. Matilde Bombardini & Francesco Trebbi, 2020. "Empirical Models of Lobbying," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 391-413, August.
    7. Ruben Enikolopov & Maria Petrova & Konstantin Sonin, 2018. "Social Media and Corruption," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 150-174, January.
    8. Wolton, Stephane, 2016. "Lobbying, Inside and Out: How Special Interest Groups Influence Policy Choices," MPRA Paper 68637, University Library of Munich, Germany.
    9. Zyuzina Lina A., 2018. "Lobbying As A Tool Of Economic Policy: Empirical Analysis And Directions Of Research," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 1, April.
    10. Zyuzina Lina A., 2018. "Empirical Analysis Of Lobbying Activities: Problems, Approaches, And Research Directions," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 3, November.
    11. Unsal, Omer & Kabir Hassan, M. & Zirek, Duygu, 2017. "Corporate lobbying and labor relations: Evidence from employee-level litigations," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 411-441.
    12. Matsusaka, John G., 2018. "Special Interest Influence under Direct versus Representative Democracy," Working Papers 278, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    13. Zerbini, Antoine, 2023. "The Case for Lobbying Transparency," SocArXiv w6vam, Center for Open Science.

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