Doctoral Dissertations
Date of Award
8-1986
Degree Type
Dissertation
Degree Name
Doctor of Philosophy
Major
Business Administration
Major Professor
Keith G. Stanga
Abstract
The purpose of this study is to investigate the influence of selected political process variables upon industry income tax burdens. The primary objective is to empirically determine the extent to which variation in industry income tax rates can be explained by the political process as represented by political resources and economic structure. The industries under study were determined by aggregating companies identified from the Federal Election Commission (FEC) tapes that corresponded to corporate political action committees (PAC's) that made political contributions to members of the two Congressional tax-writing committees (the House Ways and Means and Senate Finance Committees). Additionally, Statistics of Income (SOX) data were employed to provide information about industry incomes and taxes paid and to classify corporations into SOI four-digit industries.
Cross-sectional hierarchical regression analysis was employed to examine the effect that PAC contributions have upon industry income tax rates. Two models were developed to test the research hypotheses. Model I was developed to establish the relationship between industry income taxes paid and industry income, i.e., an income tax rate, in the absence of other political variables. Model II was developed to investigate the effect of PAC contributions on the income tax rate and whether PAC was acting as a moderator with respect to the relationship between industry income taxes paid and income.
The results indicated that although PAC contributions may not be considered a pure moderator due to its separate significant effect on industry income taxes paid, PAC contributions have an effect on industry income tax rates. Specifically, for high levels of PAC contributions, income tax rates are affected negatively. Additionally, high income industries that have the greatest incentives to participate in the political process appear to benefit by making PAC contributions while those industries with less incentives do not.
The implications of the research affect the formulation and implementation of existing and future income tax policies. The findings suggest that any tax reform effort needs to consider the impact of the income tax legislation process as it exists as well as the effect of current campaign financing laws upon that process. If favorable tax legislation can be "brokered" to accommodating industries, then issues regarding equity and compliance with the income tax system are more difficult to achieve.
Recommended Citation
Cassill, Arthur D., "An empirical analysis of the influence of selected political process variables upon industry income tax burdens. " PhD diss., University of Tennessee, 1986.
https://trace.tennessee.edu/utk_graddiss/12219