Rivalry and Equity Considerations and Mass Support for Corporate Taxation

• In Event: Experimental Approaches to IPE: Evidence from Survey and Field Experiments

Abstract

Many scholars and policymakers observe that competition for mobile capital in an increasingly globalized economy gives rise to tax competition, the phenomenon by which countries alter their general tax policy regime and lower corporate income taxes in order to attract investment. However, our understanding of how voters actually adjudicate the tradeoffs involved when governments attempt to raise revenues through corporate income taxes remains sharply limited. Drawing from theories of international political economy and social psychology, we hypothesize that citizens consider two key factors when forming preferences over corporate taxes: interjurisdictional rivalry and equity vis-à-vis individual tax burdens. Leveraging a series of survey experiments on nationally representative samples of Americans, we investigate the relative importance of each factor when citizens demand changes to the US corporate tax structure. We show that considerations of rivalry and equity have opposing effects on the public’s preferences. In further analyses, we describe important variation among theoretically relevant subpopulations—e.g., by income, type of employment, union membership status, and geographic region. Our findings shed light on the ways in which the global and domestic political contexts inform citizens’ demands for distributive business regulations.

Authors

• Vivekinan Ashok, Cornell University

• Nikhar Gaikwad, Columbia University