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Individual tax burdens and political corruption: Evidence from the SALT deduction cap

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  • Gramlich, Jeffrey
  • Nam, Yoonsoo
  • Potter, Chase
  • Venkat, Aruhn

Abstract

We investigate whether individual tax burdens affect political corruption. Higher individual tax burdens could increase government corruption by lowering after-tax income and incentivizing corruption. Alternatively, higher individual tax burdens may decrease corruption by increasing citizen political engagement and monitoring of politicians. We use the Tax Cuts and Jobs Act's (TCJA's) $10,000 cap on state and local tax (SALT) deductions and cross-county differences in property tax levels as plausibly exogenous variation in individual tax burdens. We find that future local political corruption convictions are associated with a 4.3% decrease for every 1% increase in tax burdens. Further, we document that increased individual tax burdens raise voter turnout. Four separate cross-sectional analyses find greater corruption reduction when the logic expects it. Together, our results provide evidence that tax burdens increase civic engagement and citizen monitoring of public officials, which in turn could contribute to lower corruption.

Suggested Citation

  • Gramlich, Jeffrey & Nam, Yoonsoo & Potter, Chase & Venkat, Aruhn, 2026. "Individual tax burdens and political corruption: Evidence from the SALT deduction cap," Advances in accounting, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:advacc:v:70:y:2026:i:c:s088261102600012x
    DOI: 10.1016/j.adiac.2026.100877
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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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