Skip to main content
×
×
Home

Wine Industry Campaign Contributions and Wine Excise Taxes: Evidence from U.S. States

  • Shree B. Pokharel (a1)
Abstract

Given the growing importance of the wine industry in the United States, wine special interests are on the rise. Data shows that campaign contributions from the wine industry to officials running for state offices have increased over time. Given this reality, one can expect wine excise tax to remain low in states that receive higher campaign contributions. In addition, there are theoretical and empirical reasons to believe that these tax rates are interdependent based on Tiebout competition and yardstick competition. Based on this reasoning, one can hypothesize wine excise tax rates to be spatially dependent. In this study, I test this hypothesis using state-level campaign contributions data from the National Institute on Money in State Politics and Distilled Spirits Council of the United States, Inc. and find that there is strong statistical evidence of spatial dependence between state wine excise tax rates. (JEL Classifications: C12, C23, H71)

Copyright
Footnotes
Hide All

I would like to thank the anonymous referee and Karl Storchmann for their helpful comments. I would especially like to thank Joshua Hall, John Deskins, and Bryan McCannon at West Virginia University and Donald Lacombe at Texas Tech University for their invaluable feedback. I would also like to thank Denise Roth Barber at the National Institute on Money in State Politics for providing me with enhanced access to the Institute's data and Adam Hoffer at the University of Wisconsin-La Crosse for providing me with the majority of the data required for the project.

Footnotes
References
Hide All
Anderson, K., and Nelgen, S. (2011). Global Wine Markets, 1961 to 2009: A Statistical Compendium. Adelaide: University of Adelaide Press.
Becker, G. S. (1983). A theory of competition among pressure groups for political influence. Quarterly Journal of Economics, 98(3), 371400.
Berry, W. D., Fording, R. C., Ringquist, E. J., Hanson, R. L., and Klarner, C. E. (2010). Measuring citizen and government ideology in the US states: A re-appraisal. State Politics & Policy Quarterly, 10(2), 117135.
Berry, W. D., Ringquist, E. J., Fording, R. C., and Hanson, R. L. (1998). Measuring citizen and government ideology in the American states, 1960–93. American Journal of Political Science, 42(1), 327348.
Besley, T. J., and Rosen, H. S. (1998). Vertical externalities in tax setting: Evidence from gasoline and cigarettes. Journal of Public Economics, 70(3), 383398.
Brueckner, J. K. (2003). Strategic interaction among governments: An overview of empirical studies. International Regional Science Review, 26(2), 175188.
Brueckner, J. K., and Saavedra, L. A. (2001). Do local governments engage in strategic property tax competition? National Tax Journal, 54(2), 203229.
Deskins, J., and Hill, B. (2010). Have state tax interdependencies changed over time? Public Finance Review, 38(2), 244270.
Devereux, M. P., Lockwood, B., and Redoano, M. (2007). Horizontal and vertical indirect tax competition: Theory and some evidence from the USA. Journal of Public Economics, 91(3), 451479.
Elder, R. W., Lawrence, B., Ferguson, A., Naimi, T. S., Brewer, R. D., Chattopadhyay, S. K., Toomey, T. L., and Fielding, J. E. (2010). The effectiveness of tax policy interventions for reducing excessive alcohol consumption and related harms. American Journal of Preventive Medicine, 38(2), 217229.
Elhorst, J. P. (2009). Spatial panel data models. In Fischer, M. M. and Getis, A. (eds.), Handbook of Applied Spatial Analysis (ch. 2), 81103. New York: Springer.
Elhorst, J. P. (2010). Applied spatial econometrics: Raising the bar. Spatial Economic Analysis, 5(1), 928.
Elhorst, J. P. (2014). Spatial panel data models. In Spatial Econometrics: From Cross-Sectional Data to Spatial Panels (ch. 3), 3793. New York: Springer.
Fell, J. C., Fisher, D. A., Voas, R. B., Blackman, K., and Tippetts, A. S. (2009). The impact of underage drinking laws on alcohol-related fatal crashes of young drivers. Alcoholism: Clinical and Experimental Research, 33(7), 12081219.
Fredriksson, P. G., and Mamun, K. A. (2008). Vertical externalities in cigarette taxation: Do tax revenues go up in smoke? Journal of Urban Economics, 64(1), 3548.
Hines, J. R. (2007). Taxing consumption and other sins. Journal of Economic Perspectives, 21(1), 4968.
Hoffer, A. J. (2016). Special-interest spillovers and tobacco taxation. Contemporary Economic Policy, 34(1), 146157.
Hoffer, A. J., and Pellillo, A. (2012). The political economy of tobacco control spending. Applied Economics Letters, 19(18), 17931797.
Hoffer, A. J., Shughart, W. F., and Thomas, M. D. (2014). Sin taxes and sindustry: Revenue, paternalism, and political interest. Independent Review, 19(1), 4764.
Holcombe, R. G. (1997). Selective excise taxation from an interest-group perspective. In W. S. II (ed.), Taxing Choice: The Predatory Politics of Fiscal Discrimination, 81103. New Brunswick, NJ and London, UK: Transaction Publishers.
Jordan, S., and Drenkard, S. (2015). How high are wine taxes in your state? 23 June. Retrieved from http://taxfoundation.org/blog/how-high-are-wine-taxes-your-state.
LeSage, J. P., and Dominguez, M. (2012). The importance of modeling spatial spillovers in public choice analysis. Public Choice, 150(3), 525545.
LeSage, J. P., and Pace, R. K. (2009). Introduction to Spatial Econometrics. Boca Raton, FL: CRC Press.
MacDonald, S. (1986). The impact of increased availability of wine in grocery stores on consumption: Four case histories. British Journal of Addiction, 81(3), 381387.
Miron, J. A., and Tetelbaum, E. (2009). Does the minimum legal drinking age save lives? Economic Inquiry, 47(2), 317336.
MKF Research, LLC. (2007). The impact of wine, grapes and grape products on the American economy 2007: Family businesses building value. Available at https://www.wineinstitute.org/files/mfk_us_econ_report07.pdf (assessed 2 March 2018).
Nelson, J. P. (1990). State monopolies and alcoholic beverage consumption. Journal of Regulatory Economics, 2(1), 8398.
Prat, A. (2002). Campaign spending with office-seeking politicians, rational voters, and multiple lobbies. Journal of Economic Theory, 103(1), 162189.
Sass, T. R., and Saurman, D. S. (1996). Efficiency effects of exclusive territories: Evidence from the Indiana beer market. Economic Inquiry, 34(3), 597615.
Snyder, J. M. Jr. (1990). Campaign contributions as investments: The US house of representatives, 1980–1986. Journal of Political Economy, 98(6), 11951227.
Sumner, W. G. (1892). The Financier and the Finances of the American Revolution, Volume 2. New York: Dodd, Mead, and Company.
Thornton, J. (2013). American Wine Economics: An Exploration of the US Wine Industry. Berkeley: University of California Press.
Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of Political Economy, 64(5), 416424.
Wine Institute (2016). Wine consumption in the US - The Wine Institute. Available at http://www.wineinstitute.org/resources/statistics/article86 (accessed 17 November 2016).
Yakovlev, P. A., and Guessford, W. P. (2013). Alcohol consumption and political ideology: What's party got to do with it? Journal of Wine Economics, 8(3), 335354.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Wine Economics
  • ISSN: 1931-4361
  • EISSN: 1931-437X
  • URL: /core/journals/journal-of-wine-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 5
Total number of PDF views: 21 *
Loading metrics...

Abstract views

Total abstract views: 157 *
Loading metrics...

* Views captured on Cambridge Core between 26th April 2018 - 18th August 2018. This data will be updated every 24 hours.