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

Published online by Cambridge University Press:  26 April 2018

Shree B. Pokharel
Shree B. Pokharel*
Affiliation:
College of Business and Economics, West Virginia University, Morgantown, WV 26501; e-mail: sbpokharel@mix.wvu.edu.
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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)

Keywords

campaign contributionsspatial panel data modelwine excise tax rateswine industry
Type
Articles
Information
Journal of Wine Economics , Volume 13 , Issue 1 , February 2018 , pp. 3 - 19
Copyright
Copyright © American Association of Wine Economists 2018 

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Footnotes

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.

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