Public perceptions of the tax avoidance of corporations and the wealthy

Steven Sheffrin () and Rujun Zhao ()
Additional contact information
Rujun Zhao: Tulane University

Empirical Economics, 2021, vol. 61, issue 1, No 10, 259-277

Abstract: Abstract Corporate taxation has historically relied on two views of taxation: the entity view and the aggregative view. The entity view emphasizes that the corporation as a separate entity should pay taxes. The aggregative view instead views the corporation as a conduit for its shareholders and focuses on payments by the shareholders. The public may hold either view or a mixture of views—these perceptions are likely to influence the design of tax policy. One way to distinguish between them is to explore the causal relation between attitudes toward tax avoidance by the wealthy and corporations. For example, suppose in the data that perceptions of the tax avoidance of the wealthy and of corporations are correlated, but that changes in the perceptions about corporate tax avoidance do not cause changes in the perception of tax avoidance by the wealthy. This would provide evidence for an entity view of taxation, because new evidence of corporate tax avoidance would not cause any change in perceptions of avoidance by the wealthy, who are the owners of the corporation. The public would thus not connect avoidance by corporations to their owners. On the other hand, if changes in the perceptions about corporate tax avoidance cause changes in the perception of tax avoidance by the wealthy, this would provide evidence for an aggregate view. In this case, new evidence of corporate avoidance would be reflected in the perceptions of avoidance of shareholders of the corporation. We use data on public perceptions of whether corporation and the wealthy are paying their fair share from the Pew Research Center to explore this issue. Using graph-theoretic methods for determining causal structures within recursive systems, we provide evidence that public attitudes against tax avoidance by the wealthy cause public attitudes toward corporate tax avoidance, but not vice versa. These statistical results provide evidence for the entity view of corporate taxation.

Keywords: Corporate taxation; Entity view; Aggregative view; Causality; Fairness (search for similar items in EconPapers)
JEL-codes: H20 K34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00181-020-01870-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:61:y:2021:i:1:d:10.1007_s00181-020-01870-y

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-020-01870-y

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().