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Business Political Power: The Case of Taxation

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  • Quinn, Dennis P.
  • Shapiro, Robert Y.

Abstract

We examine contending views about the forms and mechanisms of business power in U.S. politics by estimating time series models explaining taxation and redistribution. Taxation and redistribution constitute strong cases for theories about business and class power, since all firms have an interest in reducing taxation. We find that changes in corporate taxation and in redistribution between capital gains income and earned income and between corporate taxation and individual taxation are strongly influenced by political partisanship, with Democratic administrations increasing the tax burden on firms and their owners. How far corporations engage in electoral financing—measured through the establishment of corporate political action committees—is also influential. The models show some evidence consistent with the understanding of class power conceptualized by Bowles, Gordon, and Weisskopf and the presence of election cycle effects but inconsistent with implications arising from the structural dependence of the state on capital and asset concentration in the largest corporations as a mechanism of class power.

Suggested Citation

  • Quinn, Dennis P. & Shapiro, Robert Y., 1991. "Business Political Power: The Case of Taxation," American Political Science Review, Cambridge University Press, vol. 85(3), pages 851-874, September.
  • Handle: RePEc:cup:apsrev:v:85:y:1991:i:03:p:851-874_17
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    Cited by:

    1. David Lowery & Virginia Gray, 2004. "Bias in the Heavenly Chorus," Journal of Theoretical Politics, , vol. 16(1), pages 5-29, January.
    2. Edward C. Lorenz, 1995. "TJTC and the promise and reality of redistributive vouchering and tax credit policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(2), pages 270-290.
    3. Schützhofer, Timm B., 2016. "Ecuador’s fiscal policies in the context of the citizens’ revolution: a ‘virtuous cycle’ and its limits," IDOS Discussion Papers 15/2016, German Institute of Development and Sustainability (IDOS).
    4. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.
    5. Paster, Thomas, 2015. "Bringing power back in: A review of the literature on the role of business in welfare state politics," MPIfG Discussion Paper 15/3, Max Planck Institute for the Study of Societies.
    6. John S. Ahlquist & Aseem Prakash, 2008. "The influence of foreign direct investment on contracting confidence in developing countries," Regulation & Governance, John Wiley & Sons, vol. 2(3), pages 316-339, September.
    7. Cahan, Steven F., 1996. "Political use of income: Some experimental evidence from Capitol Hill," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(1), pages 69-87.
    8. David Szakonyi, 2018. "Private Sector Policymaking," Working Papers 2018-8, The George Washington University, Institute for International Economic Policy.
    9. Uk Heo & John Bohte, 2012. "Who Pays for National Defense? Financing Defense Programs in the United States, 1947–2007," Journal of Conflict Resolution, Peace Science Society (International), vol. 56(3), pages 413-438, June.
    10. Kräussl, Roman & Lucas, André & Rijsbergen, David R. & van der Sluis, Pieter Jelle & Vrugt, Evert B., 2014. "Washington meets Wall Street: A closer examination of the presidential cycle puzzle," Journal of International Money and Finance, Elsevier, vol. 43(C), pages 50-69.
    11. Geiguen Shin & Jeremy L. Hall, 2018. "Exploring the Influence of Federal Welfare Expenditures on State-Level New Economy Development Performance: Drawing From the Diffusion of Innovation Theory," Economic Development Quarterly, , vol. 32(3), pages 242-256, August.
    12. Juan A. Bogliaccini & Juan Pablo Luna, 2016. "Deflecting my burden, hindering redistribution: How elites influence tax legislation in Latin America," WIDER Working Paper Series wp-2016-92, World Institute for Development Economic Research (UNU-WIDER).
    13. repec:idq:ictduk:13681 is not listed on IDEAS
    14. DOMBOU T., Dany R., 2018. "Shadow effect from Laffer tax allergy: New tax policy tool to fight tax evasion," MPRA Paper 98646, University Library of Munich, Germany.
    15. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    16. Dany DOMBOU, 2020. "Shadow Effect From Laffer Tax Allergy: New Tax Policy Tool To Fight Tax Evasion," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 11(1), pages 27-46.
    17. Jodi L. Short, 2021. "The politics of regulatory enforcement and compliance: Theorizing and operationalizing political influences," Regulation & Governance, John Wiley & Sons, vol. 15(3), pages 653-685, July.
    18. Patrick Bernhagen & Thomas Bräuninger, 2005. "Structural Power and Public Policy: A Signaling Model of Business Lobbying in Democratic Capitalism," Political Studies, Political Studies Association, vol. 53(1), pages 43-64, March.
    19. 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.
    20. Juan A. Bogliaccini & Juan Pablo Luna, 2016. "Deflecting my burden, hindering redistribution: How elites influence tax legislation in Latin America," Working Paper Series UNU-WIDER Working Paper w, World Institute for Development Economic Research (UNU-WIDER).
    21. Shin, Geiguen, 2019. "Direct and indirect impacts of liberal immigration policies on the inflow of multinationals in the U.S," Economics Discussion Papers 2019-42, Kiel Institute for the World Economy (IfW Kiel).
    22. Bharatee Dash & Angara Raja, 2014. "Do political determinants affect revenue collection? Evidence from the Indian states," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 253-278, September.
    23. Seung-Hyun Lee & Mine Ozer & Yoon-Suk Baik, 2018. "The impact of political connections on government bailout: the 2008 credit crunch in the United States," Economics of Governance, Springer, vol. 19(4), pages 299-315, November.
    24. Juan A. Bogliaccini & Juan Pablo Luna, 2016. "Deflecting my burden, hindering redistribution: How elites influence tax legislation in Latin America," WIDER Working Paper Series 092, World Institute for Development Economic Research (UNU-WIDER).
    25. Vishal P. Baloria & Kenneth J. Klassen, 2018. "Supporting Tax Policy Change Through Accounting Discretion: Evidence from the 2012 Elections," Management Science, INFORMS, vol. 64(10), pages 4893-4914, October.

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