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

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

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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File URL: http://www.nber.org/papers/w17770.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17770.

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Date of creation: Jan 2012
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Publication status: published as 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
Handle: RePEc:nbr:nberwo:17770
Note: CF ITI LE PE POL
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