the statutory corporate tax rate of 35 % .<sup>17</sup> In the next section, I discuss this feature in detail.

# 3.1.1 Cross-Section Facts and Summary Statistics

In this subsection I briey describe the data and I provide some summary statistics. The raw data after matching Compustat and the CRP data for corporations gives a total number of 46,831 rmyear observations. Between 2004 and 2014, 1,544 rms lobbied for some of the 77 issues in at least one year. From those observations, there are 567 rms that lobbied for taxation issues at least one time between 2007 and 2014. The low participation of public rms in lobbying activity has been previously documented by Richter et al. (2009) and others. For this sample, the average fraction of lobbying rms is 8.9 % . As shown in table (1) lobbying for taxation is the most important issue in terms of expenditure between 2004-2014. In fact, it is the top lobbying issue in each individual year of this sample. This ranking by issues is consistent with evidence provided by Kerr et al. (2014) and Arayavenchkit et al. (2014) for dierent periods of time, which shows that taxation is the most relevant issue for lobbying.

Table (2) shows summary statistics for rms lobbying for taxation issues in at least one year in the sample and for rms that did not lobby for taxation issues at all. The table also displays the well documented feature that lobbying rms are larger than non-lobbying rms. For example, the data shows that sales are almost 6 times larger for lobbying rms. This is also true for capital (12 times), assets (1.8 times) and employment (7 times). Another fact consistent with previous work is that lobbying expenditures are relatively small. For the sample, the average lobbying expenditure in the sample is close to $0.27 million with a standard deviation of 0.7 million. Considering that the returns for lobbying are thought to be quite large, the fact that lobbying rms are so few and that they spend so little money remains a puzzle for political scientists.

Table (2) also shows one of the key ndings in this literature: lobbying rms pay lower eective tax rates. The tax code in the U.S. allows corporations to claim tax benets, reducing their tax burden. According to the Government Accountability Oce (GAO), in 2011 a third of the corporate tax revenue was lost in tax benets rebated to corporations. In fact, special tax provisions for individual rms have been documented by Siegfried (1974), Barlett and Steele (1988) and McIntyre and Nguyen (2004). Consistent with this anecdotal evidence, Richter et al. (2009) and Arayavenchkit et al. (2014) have shown that rms that lobby for taxation issues pay lower eective taxes as a result of tax benets targeted to them. The mechanisms through which rms obtain favorable tax benets are the existence of narrow research and development credits, tax depreciation schedules tailored to specic types of capital and thorough numerous industry-specic tax breaks related to capital.<sup>18</sup> Based on this discussion, I compute the eective tax rates for lobbying and non-lobbying rms for the sample. The average eective tax rate for lobbying rms is 18.8 % , while the average eective

> 17Appendix C contains information related to the computation of this variable and details about other measures from compustat.

> 18The fairness and implications of a system that grants tax benets to corporations is a theme of continuous debate in the media and the political arena. See for example CNN Tax breaks. The concern for the existence of lobbying corporations has also been remarked by the president of the United States in the State of the Union speech in 2011.

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