Corporate Tax Avoidance And Political Action Committee Contributions: An Empirical Analysis

This study examines the relationships between corporate tax avoidance and Political Action Committee (PAC) contributions. The study hypothesizes that corporate PAC contributions influence corporate tax avoidance behavior. However, the tax savings associated with corporate PAC contributions do not increase monotonically because of significant wealth transfers from voters to corporations and the subsequent brokering behavior of politicians in favor of the voter constituency. The results are consistent with our hypothesis.

The Effects of Political Action Committee Contributions on Medical Liability Legislation

This paper examines representatives' voting on the HEALTH Act of 2003, which proposed a limit on noneconomic damages in medical malpractice lawsuits. The estimates show that the more campaign contributions a representative received from law firm PACs, the less likely he or she was to vote for the bill, while money from insurance and health care industry PACs increased the likelihood of an aye vote. These effects remain after controlling for the endogeneity of campaign contributions. Other factors affecting voting decisions include party affiliation, representative ideology, whether or not the representative was an attorney, the change in state malpractice premiums and payouts, and the change in the number of doctors in the state. There is no strong evidence that the AMA's strategy of naming certain states as being in "crisis" increased the probability that representatives from those states supported the bill.

An Empirical Spatial Model of Congressional Campaigns

Testing and estimating formal models of political behavior has not advanced as far as theoretical applications. One of the major literatures in formal theory is the spatial model of electoral competition which has its origins in the work of Black (1948) and Downs (1957). These models are used to make predictions about the policy positions candidates take in order to win elections. A lack of data on these candidate positions, especially challengers who never serve in Congress, has made direct testing of these models on congressional elections difficult.Recently, researchers have begun to incorporate campaign finance into the standard Downsian model. These models of position-induced contributions examine the tradeoff that candidates make between choosing positions favorable to interest group contributors and positions favorable to voters. A major premise of these models is that interest group contributions are based on the policy positions of candidates. This has been borne out empirically in the case of incumbents, but not challengers.To test key hypotheses of these models, we develop a simple spatial model of position-induced campaign contributions where the PAC's decision to contribute or abstain from each race is a function of the policy distance between the PAC and the candidates. We use data from political action committee contributions in order to estimate the locations of incumbents, challengers and PACs. Our model reliably estimates the spatial positions as well as correctly predicts nearly 74 percent of the contribution and abstention decisions of the PACs. Conditional upon making a contribution, we correctly predict the contribution in 94 percent of the cases. These results are strong evidence for position-induced campaign contributions. Furthermore, our estimates of candidate positions allow us to address issues of platform convergence between candidates.