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Anti‐Corruption and Corporate Tax Burden: Evidence from China
Author(s) -
Chen Yunsen,
Zheng Dengjin,
Li Peixin,
Wang Weimin
Publication year - 2020
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12226
Subject(s) - language change , enforcement , china , politics , tax reform , business , corporate tax , government (linguistics) , indirect tax , value added tax , public economics , monetary economics , tax avoidance , economics , political science , law , art , linguistics , philosophy , literature
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.