Anti‐Corruption and Corporate Tax Burden: Evidence from China

We examine whether the Chinese government's anti‐corruption enforcement reduces corporate tax burdens. Using a difference‐in‐difference approach, we find tax burdens of firms located in corrupt political leaders’ jurisdictions are lower after these leaders were deposed. An analysis of two tax p...

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Bibliographic Details
Published in:International review of finance 2020-09, Vol.20 (3), p.781-788
Main Authors: Chen, Yunsen, Zheng, Dengjin, Li, Peixin, Wang, Weimin
Format: Article
Language:English
Subjects:
Corporate taxes
Corruption in government
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Summary:We examine whether the Chinese government's anti‐corruption enforcement reduces corporate tax burdens. Using a difference‐in‐difference approach, we find tax burdens of firms located in corrupt political leaders’ jurisdictions are lower after these leaders were deposed. An analysis of two tax policy changes shows that the reduction in tax burden is more pronounced when corrupt politicians had more power in levying taxes.
ISSN:1369-412X
1468-2443
DOI:10.1111/irfi.12226