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Political connections, corruption and tax evasion: a cross-country investigation

Political connections, corruption and tax evasion: a cross-country investigation PurposeThis paper aims to examine the association between political connections and tax evasion and test whether corruption level affects this relationship.Design/methodology/approachTax evasion measure is based on Schneider et al. (2010), while country’s political connection trend is based on Faccio (2006).FindingsUsing a sample of 35 countries, the authors document that political connections are positively associated with tax evasion and this relationship becomes stronger for high corrupt environment.Originality/valueThe findings have policy implications for countries aiming to combat tax evasion as political connection trends in one country reduce the level of tax compliance. In addition, political connections and corruption play a complimentary role in increasing tax evasion practices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Crime Emerald Publishing

Political connections, corruption and tax evasion: a cross-country investigation

Journal of Financial Crime , Volume 26 (2): 11 – Apr 1, 2019

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References (18)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1359-0790
DOI
10.1108/JFC-01-2018-0004
Publisher site
See Article on Publisher Site

Abstract

PurposeThis paper aims to examine the association between political connections and tax evasion and test whether corruption level affects this relationship.Design/methodology/approachTax evasion measure is based on Schneider et al. (2010), while country’s political connection trend is based on Faccio (2006).FindingsUsing a sample of 35 countries, the authors document that political connections are positively associated with tax evasion and this relationship becomes stronger for high corrupt environment.Originality/valueThe findings have policy implications for countries aiming to combat tax evasion as political connection trends in one country reduce the level of tax compliance. In addition, political connections and corruption play a complimentary role in increasing tax evasion practices.

Journal

Journal of Financial CrimeEmerald Publishing

Published: Apr 1, 2019

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