NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Jason M. DeBacker, Bradley T. Heim, Anh Tran

NBER Working Paper No. 17770
Issued in January 2012
NBER Program(s):   CF   ITI   LE   PE   POL

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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Document Object Identifier (DOI): 10.3386/w17770

Published: Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States, Jason DeBacker, Bradley T. Heim, Anh Tran. in Causes and Consequences of Corporate Culture, Zingales and Poterba. 2015

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