Political uncertainty is leading businesses to increase business tax protection in the election year

With tax day (4/18) just around the corner, Americans are reminded that taxes are a hot topic. When you vote, do you think about taxes?

If you answered yes, you are not alone. It’s no secret that voting and taxation are civic activities that go hand in hand; however, it may be news to you about the skepticism that elections have brought to business taxation around the world.

A new world of research, soon to be published in the press, by Richard H. Willis, Senior Associate Dean for the Faculty and Anne Marie and Thomas B. Walker, Jr., teachers of history, found that group ‘tax’ faces (legal loopholes to reduce tax debt.) increases in election years and decreases after the general election. In addition, the tax rate is rising with a high level of unpredictability about the election (i.e., how close the election will be).

“In general, people don’t like ambiguity; markets don’t like it, people don’t like it, and companies don’t like it,” Willis said. “We expected the tax protection to increase before the election because of the uncertainty of the post -election tax review.”

“Taxation and political ignorance: Public elections around the world show” saw an increase in tax rates before the election, and reduced and eliminated tax revenues. after the election. “We also found that more and more organizations are doing this for contested elections or in a country with less electoral evaluations and fairs,” Willis said.

Also written by Qingyuan Li of Wuhan University, Edward L. Maydew of the University of North Carolina at Chapel Hill, and Li Xu of Washington State University, the study used a global sample of organizations. in 36 countries with 158 votes.

Given the recent uptick in major businesses accused of tax evasion, this research has created an opportunity for policymakers to better understand the global tax crisis and take a step forward in a fight.

“This is a good time for us to think about ways we can put in place to keep the tax from working,” Willis said. “Because we now know that tax protection is going up before the election, we may be able to increase regulation in those seasons, or regulators can think of ways to improve. improve their focus on ensuring companies don’t mess with the tax code. ”

The authors of this study have collaborated on a two -world study, “Taxes and Director Independence: Evidence from Board Reforms Worldwide,” an upcoming new book.


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More information:
Qingyuan Li et al, Political uncertainty and tax evasion: evidence from national elections around the world, SSRN Electronic Journal (2014). DOI: 10.2139 / ssrn.2498198

Presented by Vanderbilt University

Directions: Political uncertainty leads businesses to increase employment tax protection in election year (2022, April 12) Retrieved 12 April 2022 from https://phys.org/news/2022-04- political-uncertainty-firms-corporate-tax.html

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