Publications
Publications
- 2016
- HBS Working Paper Series
Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation
By: Rafael Di Tella, Juan Dubra and Alejandro Lagomarsino
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 for 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.
Keywords
Business Legitimacy; State Capacity; Meetings; Taxes; Top 1%; Regulation; Prejudice and Bias; Values and Beliefs; Taxation; Business and Government Relations
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.