Despite a lack of empirical evidence, politicians, policymakers, and academics claim that corporate tax avoidance creates an unlevel playing field and exacerbates industry concentration. We investigate the validity of these claims by examining whether anti-tax avoidance regulation reduces industry concentration. Using administrative industry-level data across 17 European countries, we document significantly lower tax avoidance after the adoption of anti-tax avoidance regulation. However, despite resulting in material reductions in tax avoidance, we find that the impact of anti-tax avoidance regulation on industry concentration is statistically and economically insignificant. Further tests provide evidence that our non-results are driven by a lack of effect rather than a lack of power. Finally, we show that the lack of an effect on concentration can be explained by anti-tax avoidance regulation equally affecting tax planning by industry leaders and contenders. In short, our findings cast doubt on the claims that regulations targeting corporate tax avoidance can change industry concentration or other anti-competitive industry-level outcomes.
| Speaker: | Dr John Gallemore Associate Professor, University of North Carolina at Chapel Hill |
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