CrimProf Blog

Editor: Kevin Cole
Univ. of San Diego School of Law

Friday, October 28, 2011

DeBacker on the Influence of Imported Cultural Norms on Tax Evasion in the U.S.

Jason Matthew DeBacker (U.S. Department of the Treasury), Bradley T. Heim, and Anh Tran have posted Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States on SSRN. Here is the 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.

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