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Che-chiang Huang and Horn-in Kuo
''A note on the neutrality of profit taxes with tax evasion and tax avoidance''
( 2014, Vol. 34 No.3 )
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.
JEL: H2 - Taxation, Subsidies, and Revenue: General
L2 - Firm Objectives, Organization, and Behavior: General
Manuscript Received : Jan 10 2014 Manuscript Accepted : Sep 28 2014

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