Having grown up being spanked and sure I've turned out pretty well, I was convinced I would consistently use that as one of my parenting tools. I have spanked my son on several occasions, for both disobeying and/or serious safety violations.
I have learned, though, that this has not changed his behavior at all, only that it upset me because he looked so defeated and humiliated after I'd done it. I've spanked him until about 3 months ago (he's 3 1/2). Believe me, he's done the same things I would have spanked him for before, but it wasn't working. I'm a strong woman and it broke my heart to see him that way.
My son has also started saying "poopie" inappropriately (at the dinner table, calling names, etc.) He also repeats "bad words" (stupid, etc.) when someone says it ("He said stupid.") He is doing it to see my reaction, which is always a reminder that our rule is that we don't say it (or use "poopie" that way, whatever the case may be) and that other people have different rules and may be allowed to say it. Time outs do work for him, though. Well, at least he stays in it!! : )
Perhaps you should look at your behavior when you're correcting your daughter. Are you at her level, looking her in the eye? Are you calm? Are you commanding (lower, steady, firm voice) or wishy-washy, more like *suggesting* she listen to you?
Do you say negative things about yourself (Oh, Mommy was a bad girl for __________? Mommy is stupid for forgetting to mail that letter. ) Stop doing that this minute if you do! (And mention other people's mistakes, either). Mommy's make mistakes, too, and you can explain it away by matter-of-factly recognizing your mistake and announcing what you'll do better next time.
Remind your daughter of the behavior you want demonstrated when she breaks a rule. ("We finish our dinner before leaving the table.") Give her a consequence (no toys tonight) and stick to it. Don't let her act of testing you get her what she wants. Children really do much better when they know they don't control everything because they only have to concentrate on being a kid. They sleep better, eat better and behave better when they know they have consequences to their actions. Laughing at you while you're disciplining her needs a consequence.
You have to teach her that you mean what you say, which takes work, repetition, firmness, and continuity on your part. Even when you're tired and frustrated. (Have you ever seen Super Nanny? Some of those people try for an hour to get their kids to stay in time-out and eventually the child does! Amazing! Hard work for the parents, both emontionally and physically, but they look so confident after they've succeeded!)
I'm sorry this is so long! I honestly didn't mean to be so long-winded! I hope you find something in here that is helpful to you. And a disclaimer: I do these things with my son and he's not always on his best behavior--he's 3 1/2 and tests me frequently. But he usually does listen. Oh, one last thing, don't implement these changes at nap time/bed time. Start when she's rested and able to focus and listen well.
Good luck!
D.