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Can You Lobby Your Way to Lower Taxes?

- April 15, 2013

The Sunlight Foundation’s Lee Drutman and Alexander Furnas have some new analysis about lobbying activity and taxation, including the graphic above.  The question is whether organizations can reduce their tax burden via lobbying.  Drutman and Furnas cite this 2009 article (ungated) byBrian Kelleher Richter, Krislert Samphantharak, and Jeffrey F. Timmons, who write:

bq. 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.

There is much more in the article that attempts to sort out correlation from causation.

In further Tax Day news, here is fresh data on public perceptions of their tax burden from Gallup.  The write-up tries to gin up a story about how public opinion has changed this year — the percent who view their tax burden as fair is the “lowest since 2001” etc. — but a more tenable story is that public perceptions haven’t fluctuated all that much in the last 10-15 years.  Basically, the Bush tax cuts made people’s attitudes about their taxes more favorable, and not much has changed since.

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