Work

Tax Morale and International Tax Evasion

Year: 2019

Type: article

Abstract: Low tax morale is associated with domestic tax evasion. We find evidence of cross-border equity flows designed to evade taxes in low tax morale countries. Using Foreign Portfolio Equity Investment (FPI) flows into 21 OECD countries from 138 source countries and an index of tax morale from the World Value Survey (WVS), we show that individuals in countries with low tax morale engage in tax evasion via roundtripping through tax havens. This allows them to benefit from differential taxes applied to foreign investors vis-a-vis domestic investors. Our results remain robust to various measures of tax morale and distinct subsamples.

Source: Journal of World Business

DOI: 10.1016/j.jwb.2019.101052

Authors: David M. Kemme, Bhavik Parikh, Tanja Steigner

Institutions: University of Memphis, St. Francis Xavier University, Emporia State University

Language: English

Topic: Corporate Taxation and Avoidance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $2,050