Tax Evasion in a Unionised Economy

Laszlo Goerke

No 382, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In a unionised labour market, a substitution of a payroll for an income tax will not alter employment if tax obligations are fulfilled. However, if workers or firms can evade taxes this irrelevance result might no longer apply. This will especially be the case if the fine for tax evasion depends on undeclared income or on wage payments or if withholding regulations prevent optimal evasion choices. In such instances, tax evasion opportunities make the legal incidence of taxes an important determinant of their economic incidence and employment can rise with a substitution of an income for a payroll tax.

Keywords: Economic incidence; legal incidence; penalty; tax evasion; trade union (search for similar items in EconPapers)
JEL-codes: H22 H26 J51 J64 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2001-10
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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