Higher tax burden, less corruption: WSU researchers examine civic engagement

PULLMAN, Wash. - When citizens feel a bigger tax pinch, political corruption goes down and voter turnout rises.

That's a key finding from new research led by Washington State University, which concludes that a higher tax burden is associated with increased civic engagement and citizen monitoring of public officials.

Using county-level data on property taxes and corruption convictions by federal judicial district, the researchers estimate that every 1% increase in tax burden is associated with a 4.3% decrease in convictions for crimes such as bribery, election crimes, conflict of interest and extortion in the subsequent year.

The study also found that corruption was greater when there was weak monitoring of government by the opposing party or local news media, and when public officials were paid less relative to other counties - all suggesting that when people pay more attention to local government, it has a dampening effect on corruption.

"When you make people feel their local tax burdens more, like when Whitman County raises my taxes, I care more about what Whitman County's doing," said Chase Potter, an assistant professor of accounting in the Carson College of Business and co-author of the new paper. "And when I care more, public officials will respond, and they'll behave better when they know people are thinking, 'What am I getting for my tax dollars?'"

The paper was published in the journal Advances in Accounting as part of a special conference issue, and it won the conference's Best Paper Award. Potter's co-authors included Jeffrey Gramlich, a professor and director of the Hoops Institute of Taxation Policy and Research in the Carson College; Yonsoon Nam, who earned his PhD at WSU and is now at Clemson University; and Aruhn Venkat of the University of California, Riverside.

Political corruption is a particularly corrosive form of crime, undermining the public trust in its governmental institutions. To investigate the nexus between political corruption and taxation, the researchers used the $10,000 cap on state and local tax, or SALT, deductions that was passed by Congress in the Tax Cuts and Jobs Act of 2017.

Previously, taxpayers could write off all such taxes; the change capped that write-off, which heightened taxpayers' awareness of their local and state tax burden. The SALT cap was politically controversial, and politicians in high-tax states in particular opposed it, both before and after its passage. (Congress later raised the SALT deduction to $40,000 for 2025-2029.)

The researchers used cross-county comparisons of property tax levels and the SALT deduction cap to calculate individual tax burdens, and corruption convictions by federal judicial district for "crimes involving abuses of the public trust" carried out by the Public Integrity Section of the U.S. Department of Justice.

Their estimates showed that higher tax burden was associated with fewer future corruption convictions in the subsequent year. Four cross-sectional analyses showed that the effect was stronger when there was more robust monitoring of government by the out-of-power political party and local journalists, and weaker when public officials were paid less relative to other counties.

"While taxes are often viewed narrowly through an economic lens, they also define the social contract: When people pay into the system, they expect honesty in return," the authors wrote in the conclusion of their paper. "Our evidence supports this notion, showing that when the cost of government to citizens rises, citizens push back against corruption to improve governance."

Media Contacts

• Shawn Vestal, WSU News & Media Relations, [email protected]
• Chase Potter, WSU Carson College of Business, [email protected]