An examination of firms' responses to tax forgiveness

• 成果类型: Article
• 署名作者: Shevlin, Terry; Thornock, Jacob; Williams, Braden
• 署名单位: University of California System; University of California Irvine; Brigham Young University; University of Texas System; University of Texas Austin
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-017-9390-6
• 发表日期: 2017
• 页码: 577-607
• 关键词: fin 48; state; Amnesties; incentives

摘要

This study uses state tax amnesties to examine how firms respond to forgiveness-particularly repeated forgiveness-by a taxing authority. We posit that tax forgiveness programs alter taxpayer perceptions of the probability of detection by enforcers or the probability of future forgiveness programs, either of which could affect future tax aggressiveness. We find that firms headquartered in an amnesty-granting state increase state income tax aggressiveness following the first instance of tax amnesty, relative to control firms in other states. Moreover, we find evidence that tax aggressiveness incrementally increases with each additional repetition of a tax amnesty. Finally, we find that the effect of amnesties on tax aggressiveness is more prominent for small firms, which face less scrutiny and for which the tax aggressiveness measures are less confounded. Our findings suggest that repeated programs of tax forgiveness have increasingly negative implications for corporate tax collections.