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Taxing Under the Influence?

Corruption and U.S. State Beer Taxes

University of Louisville, Louisville, Kentucky, per.fredriksson{at}louisville.edu

Stephan Gohmann

University of Louisville, Louisville, Kentucky

Khawaja Mamun

Sacred Heart University, Fairfield, Connecticut

This article examines the effect of state level corruption on state beer taxes in the United States. Our lobby group model predicts that corruption reduces the beer tax, but this effect is conditional on the level of alcohol-related vehicle deaths. Using a panel of state level data from 1982 to 2001, we find that increased corruption is associated with lower state beer tax rates. The magnitude of the effect, however, declines with increases in alcohol-related traffic deaths. Our findings suggest that future empirical work estimating the effect of alcohol taxes on alcohol-related traffic fatalities should treat alcohol taxes as endogenous.

Key Words: alcohol taxes • corruption • political economy • traffic accidents

This version was published on May 1, 2009

Public Finance Review, Vol. 37, No. 3, 339-365 (2009)
DOI: 10.1177/1091142109332052


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