Firm Size, Government-Firm Relationship and Effective Tax Rates——Evidence from “Investment Climate Survey 2004”
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| Title | Firm Size, Government-Firm Relationship and Effective Tax Rates——Evidence from “Investment Climate Survey 2004”
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| Author | Zou Jingxian, Shen Guangjun and Ji Yang |
| Organization | China Center for Economic Research, National School of Development, Peking University |
| Email | zoujingxian@gmail.com；hnshgj@126.com；jiyangpku@163.com |
| Key Words | Firm Size; Effective Tax Rates; Government-Firm Relationship; State Tax; Local Tax |
| Abstract | So far there exists no consensus about the effect of firm size on effective tax rates, both theoretically and empirically. Further very little empirical work involves discussion on the channels behind, let alone the distinction between different reactions to state tax and local tax. To bridge this gap, this paper aims to quantify the index of government-firm relationship and empirically test how firm size affects effective tax rates via the channel of such relationship. It is found that firm size is positively correlated with government- firm relationship and the related benefit on tax comes in the reduction on local tax. Specifically speaking, a percent increase in firm size is associated with 0.4 percentage points reduction in local tax while 0.5 percentage points increase in state tax. |
| Serial Number | WP693 |
| Time | 2014-09-11 |
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