Too Big to Lose
Explaining the abolishment of the dividend tax in The Netherlands
Thomas Endhoven 10728015
First Reader: Lukas Linsi Second reader: Eelke Heemskerk.
1 Table of Contents
1 Introduction ... 3
1.1 Research methods and sources ... 8
1.2 Structure of the thesis ... 10
2 Literature Overview:... 11
2.1 Race to the bottom: ... 11
2.2 The political economy of taxation ... 12
2.3 The corporate role in international tax competition ... 15
2.4 Corporate political power and lobbying ... 16
2.5 Regulatory competition and corporate behavior ... 20
2.6 An integrated approach to the relevance of corporate lobbying and international tax competition in policy processes towards tax policy... 22
2.7 Possible explanations/hypotheses for the abolishment of the dividend tax ... 23
3 The curious story of the dividend tax in the Netherlands ... 25
3.1 Analyzing the discussion on the Dutch dividend tax ... 25
3.2 Dividend tax and its effect on competitiveness ... 26
3.2.1 Dividend tax ... 26
3.2.2 Direct competition... 27
3.2.3 Questioning the competitiveness effects ... 28
3.3 Corporate involvement and lobbying ... 31
3.3.1 The corporate interest... 31
3.3.2 VNO-NCW ... 32
3.3.3 Shell and Unilever ... 34
3.3.4 Explaining the dominance of the corporate narrative ... 36
3.4 Competitiveness and the threat of ‘’exit’’ ... 37
3.4.1 Financial obstacles ... 37
3.4.2 The changing picture ... 38
3.4.3 International competitive pressures ... 38
3.4.4 The threat of exit ... 41
4 Conclusion ... 44
6 List of References ... 47
1 Introduction
On the 10th of October 2017 the newly formed Dutch government released its coalition agreement. In
this agreement the governing parties announced their intent to abolish the dividend tax. This came as a surprise because none of the parties had mentioned this during the campaigns leading up the elections in 2017. The announcement immediately inspired a significant amount of opposition against this measure that would create a budgetary hole of 1.4 billion euros. The government firmly justified the abolishment of the dividend tax as a measure that would ensure the fiscal competitiveness of The Netherlands. Prime minister Mark Rutte went as far to say that he believed ‘’with every fiber in his body’’ that abolishing the dividend tax was necessary to attract international corporations and investments and to prevent Dutch corporations from leaving (Tweede Kamer 2017a).
The threat of international tax competition and the relocation of corporations have been used numerous times to justify lax fiscal policies when it concerns taxing mobile capital in the Netherlands. That governments offer reductions in tax rates to prevent corporations/capital of relocating and to attract new corporations is not new and is widely analyzed by the literature (e.g. Plumber et al. 2009). What is more interesting however is that when you have a closer look at the current tax system it is very unlikely that the abolishment of the dividend tax will not have a significant impact on the investment and business climate of the Netherlands. There is a lack of concrete evidence that such a measure will have its proposed effect. In fact, a majority of Dutch economic scholars think that abolishing the dividend tax is not a good idea at all (Jacobs 2018). The government argues that the abolishment of the dividend tax will make it more attractive for foreign investors to invest in Dutch companies and it will make Dutch companies more resilient to hostile takeovers. However, both these arguments do not seem to hold against any kind of economic reasoning (Jacobs 2018).
How is it that when it is far from certain that the abolishment of the dividend tax will have the proposed effect that the coalition partners still decided to do so? A possible answer can be found in the lobby effort of several Dutch corporations, most notably Shell, Unilever and interest group VNO-NCW who have especially a lot to gain from the abolishment of the dividend tax. For over more than 10 years these actors have actively communicated their wish to get rid of the dividend tax (SOMO 2017a). What is interesting is that in their publicly accessible communication to the government they advocated the abolishment of the dividend tax as measure that would increase the attractiveness of the Netherlands as a business location. It seems that Dutch corporations used the narrative of international competition to advocate the abolishment of the tax to the Government. In addition, and in relation to the fact that corporations had been lobbying for the abolishment by focusing on the narrative of international competitiveness it appears that the policy process has also been significantly influenced by the fear
that corporations would leave the Netherlands because of the dividend tax (NOS 2017). Dutch policymakers feared particularly that Shell or Unilever would choose “exit’’ in a situation where the dividend would continue to exist. The role of international tax competition, corporate lobbying and the threat of exit have been grounds for several quite intense debates in the Dutch parliament. Currently the literature lacks an integrated model that describes how international competition, corporate lobbying and the threat of exit influence each other and how they come together in specific policy processes. Despite that the literature concerned with general regulatory competition has elaborated on the political behavior of corporations in the context of international competition this has not been directly translated into the international tax competition literature. The literature does acknowledge that the exit option of corporations is what drives international tax competition, what it ignores is that the act of ‘’voice’’ also drives the competition between jurisdictions. Furthermore, Sennholz-Weinhardt (2014) states that ‘’The literature unfortunately lacks any analysis of how actors make the abstract notion of capital mobility relevant for a particular policy.’’. This is unfortunately also true for the literature that deals with international tax competition. In this thesis I will attempt to fill this gap in the literature by offering an analysis of a particular policy process. I will focus on the proposed abolishment of the Dividend tax in the Netherlands to explore the role of corporate lobbying, international tax competition and the threat of exit in the debate of tax policy. Because the role of corporate interest and threat of exit in context of international tax competition is relatively unexplored in the existing literature this thesis will provide a close look at a specific policy process. By focusing on one specific policy process I am able to make a very detailed account the political economy that surrounds tax policy adjustments including the lobby efforts of corporate interests. This detailed account will help in understanding policy processes in the context of international regulatory competition and the political behavior of corporations in such a context, which is the ultimate purpose of this thesis
The policy process that will be central to this thesis is the case of the Dutch dividend tax. In 2017 the Dutch government announced that it aimed to abolish the dividend tax in 2020. There are two main reasons as to why the Dutch dividend tax case is extremely relevant. First of all, the decision is widely justified as a measure to increase the competitiveness of the Netherlands in order to attract investment and corporations. Secondly, Corporations and corporate interest groups have been very actively and openly involved in the policy debate around the dividend tax.
The government explained that the measure is needed to preserve the competitiveness of the Netherlands as a location for investments and corporations (Regeerakkoord 2017). Based on the government’s justification and the statement made by the prime minister one could say that
international tax competition clearly is one of motives for the decision to abolish the dividend tax. The dividend tax discussion in the Netherlands has started more ten years ago. The biggest development on the dividend policy within this period was in 2005. As part of a new tax plan called ‘’working on profit’’ the rate was lowered from 25% to 15% in 2007 (Tweede Kamer 2005). The government at the time argued that this adjustment was needed to strengthen the international position of the Netherlands. The plan specifically is aimed to benefit the competitiveness of the Netherlands in order to attract investment and corporations. This justification of the tax plan offered by the government in 2005 resembles in important ways the argument that is now used to justify the abolishment of the tax. Clearly international tax competition aimed at attracting and holding on to investments and corporations plays a very significant role as a narrative in the debate around the dividend tax in the Netherlands now as it has played in 2005.
Another interesting aspect of the Dutch dividend tax case is the evident involvement of corporations and corporate interest groups in the policy debate. During the ten-year period prior to the announcement at the end of 2017 there have been multiple accounts of lobby activities by corporations and their interest groups actively arguing for the abolishment of the tax (SOMO 2017). This means corporate actors have clearly played a role in the policy process leading to the actual abolishment. There is one account of corporate lobbying in the case of the Dutch dividend tax upon which rests a decent amount of controversy. After the announcement was made that the government aims to abolish the dividend tax in 2019, several anonymous negotiators had leaked to the press that corporate actors such as Shell, Unilever and VNO-NCW (Dutch corporate interest group) were present at the coalition negotiations to talk about the dividend tax (NOS 2017a). These negotiations are not a conventional venue for lobbying which adds to the controversy of the input delivered by these corporate interests. However, corporate interests have been lobbying for the abolishment of the dividend tax very openly in the years prior to the negotiations in 2017. The corporate wish to get rid of the dividend tax was not a secret to the government prior to the negotiation in question. So, it is still quite unclear what exactly persuaded the leaders of the coalition. However, what this incident shows is that corporate interests have been heavily involved in the discussion on the dividend tax. In addition to apparent involvement of corporate interest in the policy process, the case has another interesting feature that is relevant to this research. The dividend tax itself is in general is a very interesting tax in terms of international tax competition. Dividend tax is the tax paid over dividends paid by corporations to their shareholders. In important ways the dividend tax rate can determine the profitability of shares given out by corporations in their respective jurisdiction. In practice there are all kinds of tax agreements and treaties that have an effect on the actual amount of dividend tax paid by shareholders, still there are cases where the dividend tax directly affects the profitability of shares.
This not only suits shareholders who in the end get to keep a larger percentage of their dividend but it also benefits corporations who can see their share price increase because of increased rates of return on their shares. The capital that shareholders possess is a good example of extremely mobile assets. Investors can relatively easy decide to withdraw their investments and choose another country to invest in. Additionally, dividend tax is only relevant for relatively large corporations that trade their shares publicly. Small to medium corporations typically are not publicly traded and their shareholders are relatively unlikely to move their investment internationally. Large corporations that already have international operations are relatively more mobile that small to medium corporations. This makes the dividend tax a tax that specifically targets flows of capital that are relatively mobile and move increasingly across borders. Dividend tax is therefore a tax that is highly associated with globalization and the increased cross-border flows of capital which increases the relevance of international tax competition.
These characteristics of dividend tax considered it could be argued that adjusting the tax rates are a very useful policy instrument to adjust the investment and business climate of a jurisdiction. However, there are serious doubts about the effectiveness of lowering the dividend tax rate to create a more competitive investment and business climate (e.g Jacobs 2018). In practice it is seen as not very likely by several experts that the abolishment will have a significant impact on the investment and business climate of the Netherlands. Especially in the context of the numerous tax treaties that have been negotiated between the Netherlands and other jurisdiction that virtually already exempt most foreign shareholders from Dutch dividend tax. Secondly, it is often argued that tax policy in general is not the most important factor for investors and corporations in deciding the location of their investments and operations. Other factors such as infrastructure, education and several other all weigh in the attractiveness of a jurisdiction for investors and corporations. This is not to say that tax policy is irrelevant for the overall attractiveness of the Netherlands for investors and corporations. However, there are serious reasons to question the effectiveness of abolishing the dividend tax in favor of Dutch competitiveness.
The above discussed merits of the Dutch case make it a very valuable unit of analysis. It makes for an extremely relevant context to analyze the dynamics of international tax competition, the lobby efforts of corporate interests and the interplay between the two. Both international tax competition and the lobby activities of corporate interest play a very substantial role in the policy process that has led to the proposed abolishment of the dividend tax. How and to what extent these two factors have shaped the debate and the outcome of the policy process will be central to the analysis in this thesis. The analysis will be guided by the following research question:
“How did Dutch multinationals persuade Dutch policymakers to abolish the
dividend tax?”
In order to answer this question this thesis retraces the process and provides an explanation for the outcome being the proposed abolishment of the dividend tax. Important for providing such an explanation is providing finding an explanation as to why policymakers and politicians came to the decision to propose the abolishment of the dividend tax in late 2017 and to what extend was this influenced by the political behavior of corporations. Already In 2007 Joop Wijn, secretary of finance, stated in parliament that the reduced rate in the dividend tax under the new tax plan should be a signal to the market that there is no future for the dividend tax (Tweede Kamer 2006). Despite this statement the tax survived the next 10 years without further adjustments. How could the dividend tax survive in the last ten years while it seemed that the government in 2007 has serious intentions of abolishing the tax? And maybe more interesting, why is it that in 2017 the government decided to propose the abolishment of the dividend tax, even when none of the governing parties mentioned this in their election campaigns.
There are a lot of factors that have played a role in the policy debate on the dividend tax. it would be impossible to isolate one factor and brand is as most important for shaping the outcome. However, International tax competition and corporate lobbying and the threat of exit have undoubtedly been very important for the outcome. A closer look at the dividend tax and internal communication in the government reveals that justifying the abolishment the dividend tax as measure to increase the competitiveness of the Netherlands in order to attract corporations and investment makes little sense. Based on the empirical analysis of the policy process that has led to the proposed abolishment of the divided tax I will instead argue that corporate interests in the Netherlands have been largely responsible for the abolishment of the dividend tax. Dutch Corporations, primarily Shell and Unilever, have effectively utilized the narrative of international tax competition and indirectly the threat of ‘’exit’’ in their lobby activities to persuade policymakers. The fact that the issue of dividend tax was a low salient and complex topic explains why these corporations have a significant influence on the narrative in the debate. By focusing on the narrative of international competition the corporations succeeded in transforming their private interest into that of national concern. This increased the urgency for a measure that would increase the competitiveness of the Netherlands. Additionally, International developments, notably Brexit, had made the narrative of international tax competition and the ‘’exit’’ threat more credible. This applied especially to Shell and Unilever, two large corporations that had lobbied for the abolishment and also both have headquarters in the Netherlands and the UK. Because of their dual nationality, Brexit and the fact that UK does not levy dividend tax,
the plausibility that Unilever and/or Shell would choose the ‘’exit’’ option became more credible in the perception of policymakers and therefore significantly influenced the policy outcome. The constructed narrative of international competition, the increased plausibility that these corporations would leave the Netherland because of the dividend tax and the perceived dependency of the state on the capital supplied by these corporations persuaded policymakers to adopt the private interest of these corporations into public policy.
1.1
Research methods and sources
The thesis uses the method of process tracing to answer the posed research question. Process tracing allows for a close analysis of the process leading up to the actual announcement of the intended abolishment of the dividend tax. I will identify the key events in the years leading up to the decision and will map who argued for what and why. The analysis specifically focuses on the period that starts in 2005 and continues until the present day. This period is chosen because it appears that the discussion around the dividend tax has started to take a serious form in 2005 (SOMO 2017a). Within the period, 2007 and 2017 are very important because in those years the government actually changed or announced it is intended to change the policy on dividend tax. While these has been arguable the most important developments on dividend tax policy it is more important to look at how the debate has been shaped in the years leading up to the decisions. What factors are important in an effort to explain why these decisions are made. Who or what moved the government to adjust policy and engage in international tax competition where it was not willing to in the past. Answering that question will be the focus of the process tracing exercise.
An explaining-outcome form of process tracing suits my research because it will allow me to provide an in-depth narrative like analysis of the highly relevant case of the Dutch dividend tax. The literature is currently lacking in-depth qualitative analyses of specific policy process where international tax competition plays a large role. A process tracing analysis will therefore be a valuable addition to the existing literature. As said the focus is to identify the factors that have played a role in the decision of the Dutch government to propose the abolishment of the dividend and engage in international tax competition while in the past the government refrained from abolishing the tax. Within the analysis there is a special focus on the role that corporations and corporate interest groups play and have played in the decision of the government to abolish the dividend tax. In what ways have corporations and corporate interest groups shaped the policy process that ultimately led to proposed abolishment of the dividend tax? In absence of concrete theory on the behavior of corporations and their advocacy related to international tax competition, process tracing in this case could potentially lead to building hypotheses. While theory has no central position in the actual analysis, theories and assumptions coming from international tax competition literature, literature focusing on the corporate power and
literature concerned with interest group politics are used to guide the analysis and interpreted findings.
In order to successfully reconstruct the process that has led to the proposed abolishment of the dividend tax and conduct an empirical analysis I use a selection of different information sources. Lobby efforts play an important role in the analysis of the policy process, at the same time lobby efforts are quite elusive objects of research. More often than not lobbying takes place behind the closed doors of the backrooms of politics. This is increasingly true for the lobby efforts that allegedly have taken place during the coalition negotiations. While we might never find out what has been said behind closed doors I believe there is enough information publicly available to paint a comprehensive picture of the nature of the lobby efforts in relation to the dividend tax in the Netherlands.
The first source of information that is used in the analysis are conducted interviews with individuals of organizations that have been directly or indirectly involved in the policy process and debate concerning the dividend tax in the Netherlands. Among these organizations are interest groups, NGO’s and Scholars (see appendix 1). The goal of the interviews was to learn more about the different stances and interests in the debate and gain expert information on the functioning of the dividend tax and its impact on the competitiveness of the Netherlands. The interviews are also valuable in that they can expose how the narrative of international competition and the relocation threat are perceived by the different actors involved in the debate. The second source of information are documents and recordings made available by the Dutch parliament. These are document and recordings of discussions in the parliament on the dividend tax. One particularly interesting event is a parliamentary hearing that was organized on 14th of December 2017 in response to the large backlash that had erupted over
the fact that abolishing the dividend tax in 2020 was part of the coalition agreement published two months earlier. Important stakeholders such as VNO-NCW Shell, Unilever, Akzo Nobel and Euronext as well as experts on taxation were present at this hearing. The invited quests delivered a statement and answered questions of members of parliament. Most guests also submitted a position paper on the dividend tax prior to the hearing. The hearing itself and the position papers are very valuable sources of information for the analysis. The third source of information is a set of internal documents of the ministry of finance concerning the investment and business climate of the Netherlands. Normally these documents are not publicly available but they have been disclosed on request by two NGOs, Oxfam Novib and SOMO. The request is made possible by a Dutch law that promotes transparency of public administration. Some of these direct concern discussion or advocacy on the topic of dividend tax. Additionally, they reveal the thoughts of civil servants on the dividend tax. While not all documents concern the dividend tax they also reveal the nature of relations between the ministry of finance and several interest groups on issues in the general sense. Taken together the set of documents is very
valuable to the analysis. An additional set of memos has been released in April 2018. Under severe pressure of the opposition in parliament the coalition partners were forced to release the memos that have been used in the consideration in relation to the dividend tax during the formation. These memos proved to extremely valuable in revealing the thought process of policymakers concerning the dividend tax. The fourth source of information that is used in the analysis are documents produced and published by interest groups and NGOs on the topic of dividend. These documents are published with different goals in mind but are mainly used for advocacy. Some of them argue for the abolishment of the dividend tax and focus on the benefits, others oppose the abolishment of the dividend tax. These documents are interesting because they reveal the arguments used by proponents and opponents to the abolishment of the dividend tax. Additionally, these documents show how different narratives about the dividend tax are framed in the policy discussion. The last source of information are the numerous news articles that have been written on the subject of dividend tax since 2005. News articles are used to gain extra information on statements by politicians and corporate representatives but also as a way to measure the salience and dominant narrative in the debate.
1.2 Structure of the thesis
The remainder of the thesis will have the following structure: Chapter two will feature a review and discussion of the literature that speaks to the research question and will provide the framework and hypotheses that structures the analysis. In chapter three I will conduct the empirical analysis. I will firstly analyze the competitiveness argument and the effects of the proposed abolishment of the dividend tax. Secondly, I will analyze the lobby efforts of corporations notably Shell, Unilever and interest group VNO-NCW and show how international competition has shaped their communication. Thirdly, I will look at the international developments that induce the need for international competition for the Netherlands and I will analyze how the threat of ‘’exit’’ and how this perceived by policymakers. This perception of ‘’exit’’ has ultimately changed the debate on the dividend tax in the Netherlands. In Chapter 4 I will conclude this thesis by summarizing the findings and discussing the implications for both theory and policy.
2 Literature Overview:
In this chapter I will review and elaborate on several insights and theories drawn from existing literature that are relevant to my research question and will guide the empirical effort of this thesis. First of all, as explained in the previous chapter, international competitiveness plays an important role in the discussion on the Dutch Dividend tax. Therefore, I will start by reviewing the literature that deals with International tax competition. This literature primarily explains what drives this competition and what effect it has on policymakers and tax policy. Secondly, because corporate lobbying has played a significant role in the policy process I will review several approaches to corporate power and corporate lobbying. This literature has elaborated on the conditions that explain the dominance of corporations in policy areas. Lastly, I will shed a light on some work within the literature that focusses on the politics of regulatory races. This literature offers an explanation for the behavior of corporations and how the relocation threat has an influence on the policy debate. At the end of chapter I will summarize the most important insights from the reviewed and present an integrated model and the hypotheses that will be used to guide the empirical analysis in the next chapter.
2.1 Race to the bottom:
The ‘’race to the bottom’’ is a very important phenomenon in the literature that deals with international tax competition. The literature that concerns itself with the relationship between the mobility of assets and national taxation has its origins in economics. As early as Adam Smith and more modern economists (e.g. Bates and Lien 1985; Lee and McKenzie 1989) have argued that increased mobility of capital will constitute problems for governments that wish to tax mobile assets or implement policies that conflicts with the economic interest of business actors. Under globalization policymakers would be severely restricted in their ability to adjust tax policy. This argument is commonly referred to as the Globalization Thesis/Theory. The processes of globalization such as increased capital mobility but also advances in transport and communication technologies allow the owners of mobile assets to cross borders in order to seek the highest rates of return on their assets on the international market. In effort to prevent capital flight and the relocation of corporations, governments therefore have to consider not only the domestic implications of their economic policy but also their investment climate’s position in face of the global market. This interaction between governments and internationally mobile assets is often seen as a prisoner’s dilemma. The inability of governments to harmonize tax policy internationally leaves them in a situation where they all face incentives to compete for mobile assets by lowering the tax burdens for these assets (Swank and Steinmo 2002).
The above assumptions gave way to some very grim predictions. It has long been feared that these competitive pressures will start a race to the bottom of effective tax rates on mobile assets resulting in the optimal efficient rate of zero. Accompanying these reductions in the tax burdens of mobile assets are decreasing tax revenues (Gordan and Mackie-Mason 1995). Policy makers would therefore be forced to cut domestic spending, increase budgetary deficits or shift the tax burden to less mobile factors such as labor, land and consumption. The only real winners of this race to the bottom would be the owners of mobile assets who benefit from lower rates of taxation on their assets. Many scholars and policy makers feared that the race to the bottom would seriously threatened the goods provision and distributional equality functions of governments and ultimately the very existence of the welfare state (Hicks and Swank 1992; Lee and McKenzie 1989; Genschel 2002). These theoretical inspired predictions have produced fear in both scholars and policymakers around the world.
Empirical studies of the Globalization theory have produced mixed evidence on the credibility of a race to the bottom. Rodrik (1997) for example finds that high levels of trade openness and capital account liberalization are associated with decreasing rates of capital taxes. However most of the conducted empirical studies seem to provide contradicting evidence to the Globalization theory. Quinn (1997) was one of the first to conclude that the Globalization theory and the race to the bottom narrative did not explain real world developments. In line with Quinn’s argument numerous other studies (e.g. Basinger and Hallerberg 2004; Hays 2003; Garrett 1995; Garrett and Mitchell 2001; and Swank 2002) report evidence that is incompatible with the Globalization theory. The empirical accounts do not reflect a race to the bottom in taxation of mobile assets because of increased mobility. While the accounts are still mixed the overall consensus seems to be that there has not been a dramatic decline in rates moving towards zero as predicted by the globalization theory. Although scholars have moved away from predicting a race to the bottom, politically the race to the bottom narrative is still used by opponents of international tax competition practices.
2.2 The political economy of taxation
Ever since the predictions of the Globalization theory on tax competition has been proven to be at least not as strong as theoretical predicted, scholars have attempted to extend the existing theory to explain the absence of the race to the bottom and the flaws in the economic theory of globalization. Economists augmented the traditional theory by arguing that governments use tax revenues to provide public goods such as infrastructure and education which are valuable to mobile asset holders (Devereux, Griffith, and Klemm 2002; Devereux, Lockwood, and Redoano 2008; Slemrod 2004). Taxes are not the only factor that plays a role in locational choices, owners of mobile assets are willing to pay the price and endure high-tax regimes as long as other factor such as public goods are of relative
quality. While this model explains why governments are able to sustain tax rates above zero without causing capital flight, it does still not immediately explain the variance between countries
Another rather compelling augmentation of the traditional theory has been provided by political scientist. These scholars hold on to the idea that the increased mobility of assets that is facilitated by globalization produces pressure on governments to provide a competitive investment climate through reducing the tax burdens of mobile assets (e.g. Genschel 2002). However, they criticize the existing theory for being too simplistic because it ignores a wide range of other factors that are relevant to a discussion of tax rates. They argue instead that there are several political, economic, institutional and constitutional constraints that prevent policymakers in some countries from effectively engaging in international tax competition (Basinger and Hallerberg 2004; Hays 2003; Swank 2006; Swank and Steinmo 2002; Plumper et al. 2009). These constraints form a counterforce to the pressure to lower tax rates as a result of international competition. By looking at other factors scholars have attempted to explain the absence of a race to the bottom by providing a more comprehensive picture of the political economy surrounding tax reform.
There are several domestic pressures that mitigate the pressure for tax competition. First of all, there can be numerous economic constraints to tax reform. The threat of a race to the bottom was not the only problem governments faced in the 1980s and 1990s. ‘’There was also slow growth, high levels of pre-committed budget expenditure, a mounting public debt, rising unemployment, and the threat of the shadow economy’’ (Genschel 2002). Slow growth and international competitive pressure urged the need for a tax reform. However, pre-committed budget expenditure created the need to maintain tax revenue levels and the alarming unemployment made shifting the tax burden the labor not a viable option. This context left policy makers with little room for tax reform, particularly EU member states because they faced the Maastricht criteria for limitations on debts and deficits. Table 1 provided by Ganghof (1999) summarizes this argument and shows a selection of other forces that have an influence on tax policy.
Figure 1 Political Economy Of Taxation (Ganghof 1999)
Besides economic constraints to tax reform there are also political and institutional constraints that make it difficult for policy makers to engage in international tax competition. Tax reform is at the core of the redistribution issues in society. Tax reform is likely to generate groups of winners and groups of losers. If the losers of proposed tax reform are politically influential this might produce problems in introducing and adopting the policy. Basinger and Hallerberg (2004) introduce two types of costs that are relevant with tax reform. The first they call transaction cost and is associated with moving a proposal through the legislative institutions. ‘’Transaction costs arise from (and increase with) the decentralization of the legislative process. These may be due to formal checks and balances, including the constitutional separation of powers in a political system’’ (Basinger and Hallerberg 2004). To operationalize transactional costs previous research have mainly looked at the amount of veto players in a legislative process and the ideological distance between them (Basinger and Hallerberg 2004; Ganghof 1999, 2006; Hallerberg and Basinger 1998, 1999). The second cost relevant to tax reform they call constituency costs and are associated with potential opposition to tax reform. Tax cuts are likely to force policymakers to reduce spending, increase deficits, avoid repaying debt, or shift the tax burden to immobile sources. These policy options might not seem favorable to certain groups in the political arena. Policymakers, particularly the ones that are elected, have to consider the stances of their constituents. Therefore, the ability of policymakers to engage is dependent on the institutional and political landscape of the country. Previous research has mainly looked at the ideological position of the ruling party to operationalize the partisanship explanation (Basinger and Hallerberg 2004; Clark and Hallerberg 2000; Ganghof 2006; Garrett and Mitchell 2001). Plumper et al. (2009) in their analysis look at domestic fairness norms in terms of the distribution of tax burdens by employing equality measures. They find that fairness norms as a form of constituent opinion shape the tax rates on mobile and immobile capital.
In summary, political scientists have augmented the economic traditional theory in response to the empirical reality by painting a more comprehensive picture of the domestic political economy around tax policy. With the help of this new model we can understand that policymakers have to account not only for international pressure to lower the tax burden for mobile assets, they also have to face domestic factors that constrain them in engaging international tax competition. The domestic political economy has a huge influence and, in most cases, even a dominant influence on the tax policy (Plumber et al. 2009). Based on the literature it can be concluded that differences in institutional, economic and political landscape between countries are able to explain the differences in tax policy and to what extend they participate in international tax competition. The developed model can also be used to explain why tax rates are still far from zero and why the race to the bottom narrative is inaccurate. However, what is important to remember is that international competitive pressures do still play a role in constructing tax policies for governments all over the world and are very likely to be part of a policy discussion.
2.3 The corporate role in international tax competition
The input of Political scientists has been very successful in painting a more comprehensive of the political economy surrounding tax policy to explain recent empirical accounts such as the absence of a race to the bottom. I will however argue that there is still a very crucial factor missing from this picture. The international tax competition literature assumes that corporations will leave jurisdictions that levy higher taxes than others, however the literature lacks analyses of the actual political behavior of corporations in the context of tax competition. In the end the only winners of the race to the bottom in tax policy are corporations and investors that benefit a lower tax rate as a result of international competition. Therefore, these actors have potentially a lot to gain of governments who actively compete with each other over their presence. Additionally, it is the biggest return seeking behavior of corporations and investors that drives the competition between governments. So, the behavior of corporations and investors does not only drive the competition between jurisdictions, they are also the ones that benefit the most from this competition. This rent-seeking motive would suspect that corporations and investors will engage with policymakers and advocate the lowering of the mobile tax burden. What this would mean is that corporations and investors do not only passively play a big role in international tax competition but also an actively political role. Despite the obvious relevance of the role of corporations and investors, the literature that deals with international tax competition does not adequately explore the relevance of it. This is regrettable because there are numerous reasons to believe that corporations and investors are a very important factor in the political economy of tax policy. To explore a more comprehensive understanding of the role of corporations in international tax competition I will now review existing literature that deals with corporate political power, lobbying
effort of corporations and the politics of regulatory competition. Insights from these strains of literature together can be used to explain why and how corporations are very powerful and influential actors in dynamics of international tax competition.
2.4 Corporate political power and lobbying
While the power of business in the international tax competition literature receives relatively little attention, other strains of literature have elaborated on the political power of business. There is quite an active discussion on whether corporations and their owners dominate politics in capitalist democratic societies or not. The literature offers multiple perspectives to analyze the political power of business in democracies. Quinn and Shapiro (1991) summarize three of these persuasive perspectives that are especially relevant for tax policy discussions. The first and most influential perspective is that of the structural dependence of the state on capital (Block 1977; Lindblom 1977). This approach argues that corporations are powerful because they fulfill an essential role in the economy. Corporations and their operations provide an economy with employment, investment and economic growth. In democracies politicians are held accountable for the performance of the economy by voters. At the same time ‘’politicians dependent on the voluntary market transactions of business firms to provide investment, employment, and economic growth.’’ (Quinn and Shapiro 1991). Politicians in capitalist democracies can create and implement regulations and policies, however they are unable to command corporations to perform (Lindblom 1977). In this structure there are incentives for politicians to comply with the demands of corporations, because politicians will be held accountable for recessions, stagnation and unemployment. Not only to ensure the profitability of these corporations but also to prevent them from moving out the country. In the end the structural dependence of the state on capital grants corporation a privileged position within politics. The private interest of corporations become of national importance or as Lindblom (1977, 175) writes: ‘’When a government official asks himself whether a corporation needs a tax reduction, he knows he is asking a question about the welfare of the whole society and not simply about a favor to a segment of the population, which what is typically at stake when he ask himself whether he should respond to an interest group’’.
A second perspective is the partisanship thesis. This thesis is similar to partisan argument made in relation to tax policy politics. Different parties in the political system rely on different social bases to grant them political support and their power is tied to the fortunes of their allied group. Because of this Left and Right parties have different preferences concerning macroeconomic strategies. They for example have different ideas on employment levels, monetary growth rates, income distributions, growth strategies, and growth rates. This difference in ideology is also reflected in the willingness of political parties in the left-right spectrum to give in to the wishes of corporations. This argument boils
down to the assumption that business power is greater under governments dominated by right wing parties. Right wing parties and their ideas have generally more sympathy for the demands of corporations and investors. Therefore, corporations and investors are more influential when there is a right-wing party in power.
The third perspective focusses on the institutional context of the country. Political institutions constitute of the traditions, routines and collective goals that guide interactions in the political arena. These institutions who can be formal and informal do not only determine the amount of power corporations have but also determine how and at what time it can be employed. For example, there are several formal and informal rules about where and how interest groups are supposed to lobby. To illustrate this, we can look at the United States. Before 1974 it was illegal for political parties to accept contributions from corporations. Arguable the change in electoral financing rules has changed the amount of influence corporations have in US politics. Another example of this institutional context can be the fairness norms introduced by Plumper et al. (2009). If there is a tradition in a countries political setting that favors social redistribution it might be harder for politicians to grant corporations tax reductions. In this regard the amount veto players in the policy process as discussed earlier plays a role as an institutional setting (Basinger and Hallerberg 2004; Ganghof 1999, 2006; Hallerberg and Basinger 1998, 1999). Also relevant can be the political traditions that exist in a certain political entity. This can be for example be a certain style of negotiating (winner takes all vs. corporatism) or prioritizing certain interest/issues over others. The institutional structures in a country, both formal and informal, can play a role in the shaping the political power of corporations.
These perspectives give us insights into where corporate political power originates from as well as how corporate political power is shaped by domestic factors. As elaborated before, the role of partisanship and institutional setting has been proved to be relevant to international tax competition. The fact that the literature associates partisanship and institutional setting with both international tax competition and corporate political power provides more hints that international tax competition and corporate political power are indeed related to each other. In order examine how these two concepts affect each other I will now look at literature that elaborates on the lobbying efforts of corporations. This strain of literature provides insights into how corporate power is transformed in actual influence and used in policy processes and how theoretical expectations are manifested in actual policy processes. Interest group politics literature within political science focusses on the lobby efforts of interest groups. This literature shows how corporations use their power to attain favorable policy that create most efficient political economy for their operations and how much opposition they face in the political arena.
The interest group literature has devoted much attention into the role corporations in interest group politics. Both Olsen (1965) and Schattschneider (1960) criticized the pluralist view, put forward by Truman (1951) and Dahl (1961), of interest group politics and argued that economic interests were bound to dominate interest group politics leaving not much room for more diffuse interest representation. The actual dominance of corporate interest in interest group politics is still subject of discussion. In terms of participation there is most certainly an imbalance between corporate interest representation and the representation of more diverse interests. Corporate interests spend more money on lobbying and contribute the most to campaign funds (Hojnacki et al. 2015). In the US, for every Dollar “… spend on lobbying by labor unions and public-interest groups together, large corporations and their associations now spend $34. Of the 100 organizations that spend the most on lobbying, 95 consistently represent business.’’ (Drutman 2015). The lobby populations in Washington and at the European Union are dominated by corporate interests (Berkhout et al. 2017, Baumgartner et al. 2009). These numbers show that corporations are certainly deploying more resources towards lobbying practices than any other group is society. However, the dominance of corporate interest in lobby in terms of mobilization and participation does not automatically equal a dominance in influence into the policy making process. Scholars have shown that business interests do certainly not always win (Baumgartner et al. 2009) and that their multiple constraints to their ‘’unfettered success’’ (Hojnacki et al. 2015). it appears that in the general sense the lobby efforts of corporations are not more influential and might even be less (Dür et al. 2015) influential than other interests especially when they face fierce opposition. However, this might not apply to all observable cases. The literature has identified several conditions under which corporate interest seems to have an advantage relative to other interest groups.
Pepper Culpepper (2011) in his book Quiet Politics focusses on political issues that receive little to no attention and therefore do not live in the minds of voters. In his study of corporate control across diverse cases he finds that managerial elites were able to get their preferred policy outcome even when preferences differed across countries. He argues that it is on these low salience policy issues that corporations enjoy an advantage in their lobby efforts relative to other interest groups. High salient issues are often won by forming alliances, persuading the public opinion and the interest of the median voter, which is why corporations do not win many high-salience political fights. The lobby efforts of corporations are the most effective in the context of low salient issues that are away from the public spotlight. In this context the most valuable resources are superior knowledge of the terrain and direct access to key decisionmakers which belong mainly to the arsenal of corporations. Issues such as corporate control are low salient because they are of little importance to the average voter relative other political issues and there are complex. And because they are low salient and complex there are
no incentives for politicians to invest in building expertise or for journalist to widely cover the issue. This means that under the conditions of low salience and high complexity corporations do not face much opposition in the political arena.
Culpepper elaborates on three advantages that are particularly beneficial for corporations in low salient issues. First of all, lobbying based on expertise. ‘’Company managers know more about the effects of legal changes on their company than politicians do and politicians know this.’’. Therefore, politicians are inclined to listen to the expertise of corporation representatives. Secondly, representatives of corporations are often invited to be part of informal working groups. These informal working groups are sometimes granted significant agenda-setting power. So, the power of corporations in these informal working groups is that they have the ability to set the terms of the debate in an isolated environment. Informal working groups work at their own speed and can therefore determine when they present their findings. This means these working groups can present their findings in periods of low salience and in that way have control of the timing of new regulatory initiatives. Thirdly, because of the expertise that corporations possess they are able to shape the tone of the media. When low salient issues all of a sudden become salient journalist will start to write about the issue. However, because om the complexity an information asymmetry remains. Corporations can use this asymmetry to frame the press coverage in a certain way and in this way shape the public debate. Culpepper adds that in such discussions corporations have an incentive to frame issues in a way that links their private interest to the interest in the national economy. For example, In the case of corporate control corporations have ‘’… highlighted the unfair vulnerability of their firms to foreign competition and the consequent threats to national economic independence.’’. Journalist are often aware that corporations have an interest in creating a narrative that favors them, however they are constrained by their need to write articles that are understood by their readers.
In summary, empirical evidence shows that while corporation employ more resources than everyone else on lobby they not win every political fight they get into. Especially in issues that are high salient and there is a lot of opposition corporations tend to lose. However, Culpepper in his book shows that under the conditions of low salience and complexity corporations benefit from three main advantages over any other interest group in the political arena. What this tells us is when and how corporations can be powerful political actors. However, this strain of literature still does not deal with the concept of international tax competition and its implications for lobbying efforts. To explore the role of international competition in corporate lobbying I will now move to review the literature that elaborates on the behavior of corporations in regulatory races in general.
2.5 Regulatory competition and corporate behavior
This strain of literature begins with acknowledging that modern corporations under the conditions of globalization face three options in regard to potential changes in regulation. These options are ‘’exit’’, ‘’voice’’ and ‘’loyalty’’ as famously written by Hirschman (1970) (Murphy 2004). Hirschman did not create these terms to specifically describe corporate behavior however the terms are extremely relevant. Choosing for ‘’exit’’ means relocating to new location. Using the option of ‘’voice’’ means to engage in a conversation with the government concerning the potential regulation to voice concerns or wishes. “voice’’ can also be explained as lobbying for or against certain policies that are in the interest of the corporation. The third option corporations have is ‘’loyalty’’. “loyalty’’ means to mutely accept any policy that the government wishes to implement. Choosing the option of “loyalty’’ could be because of the expectation of future political goods (Murphy 2004). The literature on international tax competition does not specifically deal with the option of ‘’voice’’ and that is a shame because it is clearly very important to the political dimensions of regulatory races and the competition between governments.
There has been quite some research that has been inspired by the options corporations have in the global economy when they face regulatory changes. This work has primarily focused on identifying the impacts of regulatory competition on state autonomy in the areas of fiscal and welfare policies, taxation, labor, and environmental and financial regulation (e.g. Carruthers and Lamoreaux, 2009; Cerny, 1997, 2010; Clift and Tomlinson, 2004; Frieden, 1991; Genschel and Pumper, 1997; Genschel and Seelkopf, 2012; Hay, 2004; Macey, 2003; Mosley, 2003; Palan, 1998a; Palan, Abbott and Deans, 1996; Radaelli, 1999; Simmons, 2001; Strange, 1998; Swank, 1998; Young and Varner, 2011 Murphy, 2004; Singer, 2004; Urpelainen, 2010). These scholars have also tried to understand under which conditions industries actually choose for ‘’exit’’ and decide to relocate. Murphy (2004) for example finds that the domestic assets specificity of corporations largely explains them choosing for “exit’’ or not. Carruthers and Lamoreaux (2009) have a similar conclusion and find that only corporations that can move without significant transaction costs will actually do so. The actual decision to relocate is different for corporation and does not only depend on cost calculations but also on other factors that are less economical. Therefore, it is extremely difficult to predict whether a corporation will leave based on change in a specific regulation. However, based on their review of the literature they find that regulatory changes will seldom cause the relocation of a significant number of corporations. They argue that: ‘’… businesses will continue to respond to regulatory initiatives by threatening “exit,” these threats should be taken for what they really are: examples of “voice.” ‘’. What they mean by this is that ‘’The image of the “regulatory race” is politically useful and has been used by various groups to oppose strengthening regulations they do not like (on the grounds that business will flee elsewhere),
or to criticize global economic integration (on the grounds that it will set off races to the bottom, and lower environmental and labor standards around the world). Regulatory races also offer convenient political cover for leaders who can justify policy choices as “necessary” given the threat of a race.’’. What follows from this insight is that not ‘’exit’’ but instead the threat of exit matters a great deal for the policy process (Sennholz-Weinhardt 2014). Especially the credibility of the ‘’exit’’ threat and how it is perceived by policymakers and politicians has influence on the power relation between corporations and government and eventually on the policy outcome (Carruthers and Lamoreaux 2009). As said before, the plausibility of a corporation leaving because of a certain regulation change is impossible to deduct from material interests and market structures alone and therefore difficult to predict. Instead the plausibility of relocation and the credibility of the ‘’exit’’ is socially and collectively constructed by the actors involved in the debate through interaction and communication (Sennholz-Weinhardt 2014). This constructivist approach allows us to analyze how the relatively abstract concept of capital mobility can be relevant to the power relation between corporations and government. And how the threat of relocation is translated and used as an action of ‘’voice’’ and how does it affect policy processes? There is however relatively little literature that uses this approach to understand the dynamics of international regulatory competition.
Sennholz-Weinhardt (2014) acknowledges the fact that the literature lacks any analysis of how actors make the abstract notion of capital mobility relevant for a particular policy. As a contribution, she finds that hedge fund managers and the Financial Services Authority in the policy discussion on the Alternative Investment Fund Managers Directive (AIFMD) have both been involved in creating a narrative that supports that hedge fund managers are highly mobile and that there is a high threat of relocation. This being the dominant narrative influenced the behavior of the FSA who is concerned with the competitiveness of London as a financial center internationally. Ultimately the constructed narrative influenced the power relation between the hedge fund managers and government and helped the hedge fund manager in their advocacy to water down the British negotiation position on the AIFMD. Sennholz-Weinhardt emphasizes the notion that it does not matter if hedge fund managers are actually planning to relocate or not. As long as the threat of relocation is credible it will have an effect on the policy process. Another analysis that puts a special focus on how the narrative of international competition is constructed and how it affects policy processes is provided by Blair (2016). He finds that the way in which international competition is framed in Canada is a significant barrier to adopting more ambitious climate policy. He argues that the barrier posed by the international competition frame is politically constructed and that is not the inevitable response to the obvious relationship between policies and international competitiveness.
Insights that can be taken from the literature on regulatory competition relevant to the behavior of corporations are that, it is very likely that corporations will use the narrative of international tax competition and/or the ‘’exit’’ threat as a form of ‘’voice’’ to attain desired policy from their respective governments. The successfulness of this efforts depends on how credible the narrative of international competition and the ‘’exit’’ threat are as perceived by policymakers. A constructivist approach allows us to see this perception as one that is socially constructed in the debate through interaction and communication between corporations and policymakers and is possible also influenced by other developments.
2.6 An integrated approach to the relevance of corporate lobbying and
international tax competition in policy processes towards tax policy
Based on the insights retrieved from a review of the existing literature that deals with corporate political power, lobbying effort of corporations and the politics of regulatory competition I will now construct an integrated approach that allows me analyze to relevance of corporate lobbying and international tax competition in policy process that has led to the intended abolishment of the dividend tax. This approach is central to the policy tracing effort in this thesis. The integrated approach contains of the following insights
First of all, international tax competition is a very important factor in the constructing tax policy for governments around the world. The effect has not been as devastating as has been predicted by scholars. This has been explained by the fact that international competition is not the only consideration that policymakers make, economic factors such budgetary limits and unemployment, political factors such as the stance of constituents and institutional factors such as the different veto players involved in the process are also important factors in considering adjusting tax policy. For policymakers to decide to engage in international tax competition the pressure to do so has to be quite significant. A comprehensive study of a tax policy processes thus requires a proper investigation of these factors and an analysis of the actual pressure to compete.
Secondly, there is a significant economic motive for corporations to use the option of ‘’voice’’ and advocate reductions in tax rate to their respective governments. The successfulness of these lobby efforts depends on a range of factors. Capital dependency, partisanship and institutional context can dictate the amount of power corporations in a political system can exercise. Empirically speaking corporations generally do not seem to have more influence on policies that other interest groups. However, under the conditions of low salience and high levels of complexity corporations do seem to have several advantages that make them more influential than other actors. In order to investigate and explain the successfulness of corporate lobbying for reduction in tax rates one would have to
account for issue salience, issue complexity, capital dependency, partisanship, organizational and resource factors and institutional context.
Thirdly, as described before some policy areas such as tax are subject to international regulatory competition. Under this conditions corporations have another way of lobbying for desired policy which is the threat of ‘’exit’’. Because governments rely on corporations to provide the economy with employment and capital they are inclined to listen to these threats especially when they are coming from large corporations. Whether or not the threat influences the policy outcome depends on the credibility of the ‘’exit’’ threat. Because it is extremely difficult and arguable impossible to predict whether a corporation would actually relocate because of a specific policy, policymakers have to rely on their perception of this threat. This perception is socially constructed within the debate by all actors involved and can be influenced by the lobbying communication of corporations. The narrative of international tax competition can therefore play a very influential role in policy debates and the lobbying strategy of corporation because they align corporations private interest with the national interest. Additionally, the narrative can be used by politicians as a political cover to justify decisions that would be otherwise regarded as controversial. Based on these insights, an analysis of the dynamics of international tax competition and corporate lobbying should focus on how the narrative of international competition and the threat of ‘’exit’’ is constructed by corporations and perceived by policymakers.
2.7 Possible explanations/hypotheses for the abolishment of the dividend tax
The research question that is central to this thesis is: “How did Dutch multinationals persuade Dutch policymakers to abolish the dividend tax?”. Based on the literature and the integrated approach I will now present three hypotheses which can potentially answer the research question. These hypotheses will be tested in the following chapter.Inspired by the literature on international tax competition we can expect that when the pressures to engage in competition are significantly high and there are obvious economic benefits that outweigh the loss of tax revenue policymakers will adjust tax policy even without the political involvement of corporations. Therefore, the first hypothesis is:
H1: An objective analysis of direct competition and/or the perceived positive effects of the abolishment of the dividend tax on competitiveness persuaded Dutch policymakers to abolish the dividend tax.
Following from the literature on corporate lobbying notably Culpepper (2011), the work by Sennholz-Weinhardt (2014) and Carruthers and Lamoreaux (2009) we can expect that corporations lobbying for adjustment of tax policy will actively construct a narrative of international competition and in this way
transform their private interest to a national interest. Doing this successfully will increase the urgency of the measure. Based on this expectation the second hypothesis is:
H2: Dutch multinationals have (socially) constructed a narrative of international tax competition in relation the Dutch dividend tax in their lobby communications and in this way increased the urgency of the measure and persuaded Dutch policymakers to abolish the dividend tax.
The last hypothesis is based on the work of Quinn and Shapiro (1991), Block (1977) and Lindblom (1977) on the capital dependency of the state and the work by Sennholz-Weinhardt (2014) and Carruthers and Lamoreaux (2009) on the use of the threat of exit by corporations as an act of voice. It can be expected that corporations politically involved in a policy process in the context of international regulatory competition will use the threat of exit to persuaded policymakers. Depending on the credibility of this threat policymakers will be forced to adjust policy because of the dependency on the capital supplied by the corporations in question. The third hypothesis is:
H3: Dutch multinationals have in their communication suggested that the dividend tax is a relevant factor for their locational decisions. The increased plausibility of this threat of ‘’exit’’ in the eyes of policymakers persuaded them to abolish the dividend tax.
3 The curious story of the dividend tax in the Netherlands
3.1 Analyzing the discussion on the Dutch dividend tax
The discussing around the dividend tax in the Netherlands has been going on for over ten years. Within this ten-year period there have been only two major dividend policy developments. The first one is the ten percent tax cut that decreased the Dutch dividend from 25% to 15%. This measure was taken along a wide range of other measures aimed at increasing the competitiveness of the Netherlands as location for business and investment (Tweede kamer 2006). The second development happened very recently when the newly formed Dutch government presented its coalition agreement named ‘’Trust in the Future’’ in late 2017 (Regeerakkoord 2017). Written into this agreement is the intent to abolish the taxation levied on dividend payments per 2019. This fact incited a lot of critique and opposition from society and members of parliament.
At time of writing this thesis the coalition parties still have the same ambition as they had in the end of 2017. Despite the eruption of fierce opposition from political parties, groups in society and various experts after the announcement, the coalition partners still stand firm behind their intent to abolish the dividend tax (Trouw 2018a). The actual vote in parliament will happen somewhere in the year 2018. Because of this one could simply argue that any analysis of the policy process before the actual vote would be premature and shooting at a moving target. However, I would argue that the decision to adopt the abolishment of the dividend tax into the coalition agreement can be seen as a serious sign that the new government thinks this is very important measure. The fact that the coalition has a majority means that are no more serious obstacles to getting the policy through parliament. This basically means that the decision has already been made. Even in the scenario that the policy will not pass parliament, the decision the adopt the measure in the coalition agreement is still a very interesting object of research. Based on these considerations, the main focus of the following analysis will be on the decision that has been made in the end of 2017 by the negotiating coalition partners, and how this decision has been influenced by international competition and corporate lobbying. However, this does not mean that the developments in 2018 are not relevant to the analyses and therefore will be ignored. To the contrary, Debates and communication in 2018 are very valuable in revealing the considerations that have been made.
The actual analysis will be structured as follows: Firstly, I offer a closer look at the dividend tax and how the abolishment it is intended to increase Dutch competitiveness as argued by government officials and contrast this view with insights from interviews and literature. Secondly, I will analyze the lobby efforts of several corporations and corporate interest groups, specifically I will focus on the efforts of interest group VNO-NCW and corporations Shell and Unilever. These actors were and are
