Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation
| Title: | Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation |
| Author: |
Di Tella, Rafael M.; Dubra, Juan; Lagomarsino, Alejandro Luis
Note: Order does not necessarily reflect citation order of authors. |
| Citation: | Di Tella, Rafael, Juan Dubra, and Alejandro Lagomarsino. "Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation." Harvard Business School Working Paper, No. 17-046, December 2016. |
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| Abstract: | We analyze the role of people’s beliefs about the rich in the determination of public policy in the context of a randomized online survey experiment. A question we study is the desirability of government-private sector meetings, a variable we argue is connected to State capacity. Survey respondents primed with negative views about business leaders want fewer meetings, as well as higher taxes to the top 1% and more regulation. We also study how these effects change when subjects are (additionally) primed with positive/negative views about government officials. Distrust in the government increases the preferred tax rate on the top 1% only when business legitimacy is low. A model with multiple equilibria helps interpret these findings. In one of the equilibria, meetings are allowed, business legitimacy is high, and people set a low income tax rate for businesspeople. In the other, meetings are forbidden, business legitimacy is low, and people set high taxes to punish the businesspeople for their corrupt behavior. |
| Terms of Use: | This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP |
| Citable link to this page: | http://nrs.harvard.edu/urn-3:HUL.InstRepos:30861194 |
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