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Taxing Under the Influence?

Author

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  • Per G. Fredriksson

    (University of Louisville, Louisville, Kentucky, per.fredriksson@louisville.edu)

  • Stephan Gohmann

    (University of Louisville, Louisville, Kentucky)

  • Khawaja Mamun

    (Sacred Heart University, Fairfield, Connecticut)

Abstract

This article examines the effect of state level corruption on state beer taxes in the United States. Our lobby group model predicts that corruption reduces the beer tax, but this effect is conditional on the level of alcohol-related vehicle deaths. Using a panel of state level data from 1982 to 2001, we find that increased corruption is associated with lower state beer tax rates. The magnitude of the effect, however, declines with increases in alcohol-related traffic deaths. Our findings suggest that future empirical work estimating the effect of alcohol taxes on alcohol-related traffic fatalities should treat alcohol taxes as endogenous.

Suggested Citation

  • Per G. Fredriksson & Stephan Gohmann & Khawaja Mamun, 2009. "Taxing Under the Influence?," Public Finance Review, , vol. 37(3), pages 339-365, May.
    • Handle: RePEc:sae:pubfin:v:37:y:2009:i:3:p:339-365
    DOI: 10.1177/1091142109332052
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