Why Do 'Schwarzeneggers' Raise Taxes? The Popularity of Governors and State Tax Policy

How does the political popularity of a sitting governor affect that incumbent’s tax policy choices? In this paper, I discuss whether, and by what degree, a governor’s popularity affects his or her tax policies between 1970 and 2010. The results show that high levels of popularity may induce governors to act contrary to the interests of independent voters. I find that popular Democratic governors have more incentives to increase corporate taxes, while popular Republican governors are likely to raise sales taxes. Further analysis suggests that popular term-limited governors are more likely to increase total taxes than their counterparts who are eligible for reelection. In addition to explaining the role of popularity in incumbents’ policy choices, these findings improve our understanding of the interaction between voters’ behavior and political attitudes of public officials in representative democracy.