Social Insurance Contribution Burden,Free Cash Flow Level And Enterprise Tax Avoidance

Social Insurance system is the core of China’s social security system,which aims to provide assistance to the social citizens who have temporarily lost their jobs and ability to work due to force majeure,accidents or health damage.The existence of this system provides a basic guarantee for our people’s lives and is an important institutional arrangement to maintain the stability of our social production and people’s lives.Compared with other countries in the world,the collection ratio of social insurance premiums in China has always been in the forefront according to the ranking from high to low,while the part paid by enterprises accounts for a large proportion,facing great pressure of social insurance payment.This also brings the following questions: How will enterprises cope with and alleviate the pressure brought by social insurance contributions? When the cost of social insurance increases,will it be the preference of enterprises to reduce other taxes? Will there be differences in the response measures taken by enterprises when they face the burden of social insurance payment in different periods? Will the behavior taken by the enterprise have a positive or negative impact on the future survival and development of the enterprise? For these problems,this paper attempts to start with the relationship between the social insurance premiums paid by enterprises for employees and tax evasion,and explore them in different life cycle stages.Based on the empirical results and social reality,this paper puts forward some opinions.This paper obtained the relevant data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2019,and empirically investigated the impact of the amount of social security expenses borne by enterprises on the degree of tax evasion.According to the life cycle theory,this paper divides the selected listed companies into three stages: growth stage,maturity stage and recession stage,and analyzes the influence of social insurance payment burden of listed companies on their tax avoidance behavior in groups.According to the empirical results,this paper holds that: on the whole,when the social security fees paid by listed companies for employees increase,the internal capital outflow of the company will increase and the level of free cash flow will decrease,thus stimulating enterprises to take tax avoidance;From the perspective of enterprise life cycle stage,when the social insurance contribution burden of enterprises increases,enterprises in the growth stage will be more inclined to take actions to avoid tax,while those in the mature stage will be relatively less affected,while those in the recession stage will be insensitive to this.In addition,the heterogeneity of enterprises is also analyzed according to their different life cycle stages.The results show that: from the perspective of regional differences,listed companies in areas with less financial pressure are more likely to take tax evasion measures when they should pay more social insurance fees for employees;From the perspective of individual enterprises,the change of social insurance costs has a more significant role in promoting tax avoidance behavior of enterprises with higher financing constraints and lower internal and external governance supervision level.Furthermore,this paper also discusses whether the increase of social insurance costs borne by enterprises will increase or damage the value of enterprises.The empirical results show that the increase of social insurance costs borne by listed companies will eventually damage the value of enterprises,which is not conducive to the development of enterprises.Furthermore,the influence period of the payment of social insurance premiums on the tax avoidance behavior of enterprises is further studied.The results show that the social insurance premiums paid by enterprises for employees will not only significantly promote their tax avoidance actions in this period,but also promote their tax avoidance behaviors in the next three periods,but this promotion will gradually decrease with the increase of time.Finally,according to the research results and analysis,this paper puts forward the following suggestions from the individual level of enterprises and the national macro level:(1)The individual level of enterprises:improve the internal and external governance mechanism of enterprises and strengthen enterprise management.(2)National macro-level: improve the design of social insurance system and reasonably reduce the social insurance contribution rate;Increase government expenditure on social security;Accelerate the "fee-to-tax" of social insurance and strengthen the collection and management of social insurance fees;Create a good financing environment;Implement dynamic supervision according to different life cycles of enterprises.