Tax Policy Research
John Barrick
Brigham Young University
KPMG/ATA Tax Doctoral Consortium
February 26, 2015
Leave of Absence
• Two years on the policy staff at the Joint
Committee on Taxation
– Jim Wheeler, George Plesko, Lil Mills, Pete
Lisowsky, John Robinson
• Tax is law, and law is politics
• Tax policy community is quite small and close
• Try to let my Hill experience guide my research
Goal of Tax Planning
• Minimize after-tax cash flows
• Can be accomplished in two primary ways:
– Tax planning
• Timing of income and deductions
• Shifting income between taxpayers and jurisdictions
• Conversion
– Tax policy
• Raise revenue, encourage activities deemed to be in the
public interest, redistribute wealth (Scholes and Wolfson
1992)
• Active financing, cost recovery, repatriation, black liquor
Tax Lobbying
“Ways and Means stands at the vortex of two
worlds. One is the world of government and its
awesome power of taxation; the second is the
business world, in which the whims of Ways and
Means can mean the saving—or losing—of
millions, even billions, of dollars a year.”
Birnbaum and Murray, 1987
Tax Lobbying and Corporate Political Activity:
How Do Firms Seek Tax Relief? Barrick and
Alexander (2014)
• What are the tax lobbying strategies that a
firm may use?
• A lot of tax research examining lobbying and
taxes is being done, but a complete picture of
tax lobbying is yet to emerge.
• We conduct a descriptive field study with
policy makers and corporate, contract, and
trade association lobbyists.
Barrick and Alexander (2014)
• Tax lobbying largely uses a relational because of the
Ways & Means and Senate Finance Committees.
• Individual, collective, and hybrid participation
strategies are used.
• Informational and financial specific strategies are used
to influence tax policy.
• Taxes are used to accomplish many policy goals
because it both authorizes and appropriates in a single
bill.
• Offensive versus defensive lobbying.
• Tax extenders are an important subset and drive year
to year tax legislation.
Corporate Taxes and Lobbing: Getting a Seat at
the Table. Barrick and Frischmann (2014)
• What are the relative roles of individual versus
collective tax lobbying?
• The research examining lobbying and taxes
primarily considers only the individual
participation strategy.
• We hand collect trade association disclosures
to examine the relative effect of lobbying
expenditures.
Barrick and Frischmann (2014)
• Trade associations provide constituency and
cover to firms when engaging in corporate
political activity.
• The use of a hybrid-participation tax lobbying
strategy reduces a firm’s effective tax rate.
• What does disclosure proxy for?
Future Research
• What is the role of trade associations?
• What are the antecedents of choosing to
lobby individually, collectively, or using a
hybrid-participation strategy?
• Lobbying benefits are often non-excludable,
does that encourage free riders?
• Given the returns on lobbying, why don’t
more firms participate?
Influencing Policy Makers
• Be active in professional associations
– ABA Tax Section, AICPA
• Publish in outlets policy makers read
– Tax Notes
• Write comment letters
• Testimony
• Visit policy makers, be prepared
– Way and Means, Finance, Joint Tax, Office of Tax
Policy