Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 3 of 3
Full-Text Articles in Law
Administrative Procedures As Tax Enforcement Tools, Wei Cui, Jeff Hicks, Michael Wiebe
Administrative Procedures As Tax Enforcement Tools, Wei Cui, Jeff Hicks, Michael Wiebe
All Faculty Publications
We study how common administrative procedures affect firm tax evasion. We begin with the counter-intuitive observation that many firms bunch above, rather than below, large notches in China’s corporate income tax. Cross-sectional patterns suggest that administrative procedures in the prepayment and refund system served as de facto enforcement tools that prevented some firms from accessing the reduced tax rates below the notches. Following a regulatory reform that eliminated these procedures, bunching below the notches increased dramatically. The results imply a tradeoff between reducing administrative barriers and allowing much taxpayer non-compliance in low-compliance environments.
Taxpayer Self-Inspections, Audits, And Optimal Tax Administration: Evidence From China, Wei Cui
Taxpayer Self-Inspections, Audits, And Optimal Tax Administration: Evidence From China, Wei Cui
All Faculty Publications
I document an important tax collection practice that is previously unknown to research on tax administration: mandatory taxpayer self-inspections. The practice emerged spontaneously across China in the 1990s and persists to this day despite having no basis in law. If taxpayers report additional liabilities after self-inspections, no penalties are imposed. Unlike tax amnesties, self-inspections are (i) backed up by the threat of government inspections with a significantly higher-than-normal audit probability, and (ii) used as a basic, routine revenue-generation technique. I show that self-inspections represent roughly 50% of the activity in China’s “tax inspection” (jicha) system and assume even greater importance …
Cash On The Table? Imperfect Take-Up Of Tax Incentives And Firm Investment Behavior, Wei Cui, Jeffrey Hicks, Jing Xing
Cash On The Table? Imperfect Take-Up Of Tax Incentives And Firm Investment Behavior, Wei Cui, Jeffrey Hicks, Jing Xing
All Faculty Publications
We investigate whether tax incentives are effective in stimulating private investment in less developed countries, by exploiting the introduction of accelerated depreciation for fixed assets investment in China as a natural experiment. In contrast to the large positive impact of similar tax incentives in the U.S. and U.K. found in recent studies, accelerated depreciation appeared ineffective in stimulating Chinese firms’ investment. Using confidential corporate tax returns from a large province, we find that firms fail to claim the tax benefits on over 80 percent of eligible investments. Firms’ take-up of the tax incentive is significantly influenced by their taxable positions …