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

Abstract

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.