Monopolists' Profit Tax Evasion Revisited

T. C. Michael Wu and C. C. Yang

Public Finance Review, 2011, vol. 39, issue 6, 831-840

Abstract: This article revisits the issues of neutrality and separability for a monopolistic firm. It is shown that as long as the monopolistic firm has objectives other than maximizing profit, then in general: (1) profit taxes will not be neutral, and (2) the firm’s production and evasion decisions will not be separable from each other. The authors argue that the nonneutrality result of profit taxes is quite robust; however, there are plausible exceptions to the nonseparability result of profit taxes.

Keywords: profit tax; tax evasion; multiple objectives; tax neutrality and separability (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:39:y:2011:i:6:p:831-840

DOI: 10.1177/1091142111424277

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