Political Connections, Corporate Social Responsibility And Tax Avoidance

With the rapid development of the global economic and the aggravation of tax avoidance behaviors in many enterprises, more and more scholars started to pay close attention to the relationship between corporate social responsibility performance and tax evasion behaviors. Overall, the current research has two arguments. The first one is called culture morality which regards the tax evasion behavior as an immorality behavior. Such behaviors will not only hinder the development of the enterprises, but also damage the fairness of social development. Therefore, an enterprise with a good corporate culture would reduce the tax avoidance behaviors. Another argument is called risk management view, which assumes that the enterprises’ behavior of fulfilling their social responsibility is actually a process of risk management. The companies reduce the risk through fulfilling social responsibility, which including tax evasion decision.The relevant data shows that the domestic revenue in China increased slowly recently. And some research shows that this phenomenon is not only connected with the gloomy economic situation and structural tax reductions policy, but also related to the severe tax evasion problem in China. This article, based on the present research, is mainly studied the relationship between the social responsibility performance and the tax evasion behaviors in the private enterprises of China. The tax evasion behavior in this study, including some behavior aims to deduct tax through some complicated ways and some tax preference from government. The research indicated that the better the social responsibility performance of private enterprise is, the more likely the tax evasion problems happen. But this correlativity would be weaken in those enterprises has a connection with the government compared to those normal enterprises. Besides, the influence varies significantly among the central government and local government on account of the tax system reform in China. In case, this paper divides political relation into two kinds. One is the central government’s political connections and another is political connections with local government. We also found that when the political connection is from the local governments, it shows more weakening effect on the significant positive correlation between corporate social responsibility performance and tax avoidance behaviors.