Effective tax rates and the political cost hypothesis: A re-evaluation of Australian evidence

Davidson, S and Heaney, R 2012, 'Effective tax rates and the political cost hypothesis: A re-evaluation of Australian evidence', Australian Tax Forum, vol. 27, no. 1, pp. 79-105.


Document type: Journal Article
Collection: Journal Articles

Title Effective tax rates and the political cost hypothesis: A re-evaluation of Australian evidence
Author(s) Davidson, S
Heaney, R
Year 2012
Journal name Australian Tax Forum
Volume number 27
Issue number 1
Start page 79
End page 105
Total pages 27
Publisher The Tax Institute
Abstract This paper examines the relationship between effective tax rates and firm size. The political cost hypothesis suggests that the very largest firms would face higher effective tax rates, while the political power hypothesis suggests that larger firms are better able to lobby government and reduce their effective tax rate. Conversely larger firms have access to better tax planning resources and so could reduce their effective tax rate. The results in this paper show a non-linear relationship between size and effective tax rate. In contrast to the extant Australian literature this paper documents evidence in support of the political cost hypothesis
Subject Applied Economics not elsewhere classified
Keyword(s) Tax
policy
Copyright notice © 2012 Taxation Institute Australia
ISSN 0812-695X
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