Abstract
ABSTRACT Despite the global economic downturn, China’s taxation continues to grow rapidly. Although many scholars attribute this phenomenon to macro factors, in this study, we investigate this issue from the perspective of combining enterprises and tax enforcement. Through a regression analysis of data from Chinese listed firms over the 2008–2018 period, we find that tax enforcement can lead to the stickiness of corporate tax expenses, that is, the percentage decrease in tax expenses for a decrease in sales revenue is less than the percentage increase in tax expenses for an equivalent increase in sales revenue. Further analysis shows that tax stickiness exists in multiple taxes, with business tax stickiness being the highest. Tax stickiness provides a new explanation for China’s taxation to maintain rapid growth during economic downturns.
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