Origins and Consequences of Changes in U.S. Corporate Taxation, 1981-1998

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Abstract
We propose that U.S. corporate taxation revenue, 1981-1998, responded to political and economic forces in ways consistent with a partisan and organizational view of politics, but inconsistent with a structural dependence view. We employ Vector Error Correction (VEC) models to examine our hypotheses, and offer a new method for generating impulse-response function boundaries in VEC models. We find that short-term increases in corporate tax revenue followed from Democratic Presidential Administrations, decreasing business political activity, and increasing economic growth, trade, and inward foreign direct investment.

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