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http://ssrn.com/abstract=1941412
 
 

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Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States


Jason Matthew DeBacker


Middle Tennessee State University - Department of Economics and Finance

Bradley T. Heim


Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Anh Tran


Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

January 17, 2012

Indiana University School of Public & Environmental Affairs Research Paper No. 2011-10-01

Abstract:     
This paper studies how cultural norms and enforcement policies influence illicit corporate activities. Using confidential IRS audit data, we show that corporations with owners from countries with higher corruption norms engage in higher amounts of tax evasion in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures which significantly increased tax compliance. However, we find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from countries with higher corruption norms. This suggests that cultural norms can be a challenge to legal enforcement.

Number of Pages in PDF File: 51

Keywords: tax evasion, corruption, norms, legal enforcement

JEL Classification: H26, M14, D73

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Date posted: October 10, 2011 ; Last revised: May 29, 2012

Suggested Citation

DeBacker, Jason Matthew and Heim, Bradley T. and Tran, Anh, Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States (January 17, 2012). Indiana University School of Public & Environmental Affairs Research Paper No. 2011-10-01. Available at SSRN: http://ssrn.com/abstract=1941412 or http://dx.doi.org/10.2139/ssrn.1941412

Contact Information

Jason Matthew DeBacker
Middle Tennessee State University - Department of Economics and Finance ( email )
Murfreesboro, TN 37132
United States
HOME PAGE: http://mtweb.mtsu.edu/jdebacker/
Bradley T. Heim
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States
Anh Tran (Contact Author)
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States

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