A note on the neutrality of profit taxes with tax evasion and tax avoidance

Che-chiang Huang () and Horn-in Kuo ()
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Che-chiang Huang: Department of Public Finance and taxation
Horn-in Kuo: Department of International Business

Economics Bulletin, 2014, vol. 34, issue 3, 2038-2043

Abstract: Traditional literature exploring the relationship between production and tax evasion ignores the impact of other activities on these two decisions. This paper incorporates firms' tax avoidance activities into the model of tax evasion. In contrast to conventional results, we find that profit tax is not necessarily neutral. In addition, the independency or separability of tax evasion and production decisions may not hold either whenever tax avoidance is present.

Keywords: profit taxes; tax evasion; tax avoidance. (search for similar items in EconPapers)
JEL-codes: H2 L2 (search for similar items in EconPapers)
Date: 2014-09-28
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Citations: View citations in EconPapers (1)

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