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Tax Evasion and Monopoly Output Decisions: Note

Author

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  • Gideon Yaniv

    (Tel-Aviv University National Insurance Institute, Israel)

Abstract

This note readdresses the issue of monopoly profit tax evasion and its output decisions recently reexamined in this journal by Wang (1990) under the assumption that the probability of detection and the penalty rate increase with the amount of understated profit. The note shows that contrary to Wang's allegation, the separabil ity of the monopolist's output decision from its tax evasion behavior (obtained by Wang and Conant, 1988, under the assumption that the probability of detection and the penalty rate are exogenously fixed) still holds under his more realistic assump tions. Consequently, profit taxes are still neutral with respect to the monopolist's profit-ntaximizing output.

Suggested Citation

  • Gideon Yaniv, 1996. "Tax Evasion and Monopoly Output Decisions: Note," Public Finance Review, , vol. 24(4), pages 501-505, October.
    • Handle: RePEc:sae:pubfin:v:24:y:1996:i:4:p:501-505
    DOI: 10.1177/109114219602400406
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    References listed on IDEAS

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    1. Marrelli, Massimo, 1984. "On indirect tax evasion," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 181-196, November.
    2. Wang, Leonard F.S. & Conant, John L., 1988. "Corporate Tax Evasion and Output Decisions of the Uncertain Monopolist," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(4), pages 579-581, December.
    3. Wang, Leonard F.S. & Conant, John L., 1988. "Corporate Tax Evasion and Output Decisions of the Uncertain Monopolist," National Tax Journal, National Tax Association, vol. 41(4), pages 579-81, December.
    4. Leonard F.S. Wang, 1990. "Tax Evasion and Monopoly Output Decisions with Endogenous Probability of Detection," Public Finance Review, , vol. 18(4), pages 480-487, October.
    5. Yaniv, Gideon, 1988. "Withholding and non-withheld tax evasion," Journal of Public Economics, Elsevier, vol. 35(2), pages 183-204, March.
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    Citations

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    Cited by:

    1. Laszlo Goerke, 2008. "Bureaucratic corruption and profit tax evasion," Economics of Governance, Springer, vol. 9(2), pages 177-196, May.
    2. Laszlo Goerke, 2007. "Corporate and personal income tax declarations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 281-292, June.
    3. Che-chiang Huang & Horn-in Kuo, 2014. "A note on the neutrality of profit taxes with tax evasion and tax avoidance," Economics Bulletin, AccessEcon, vol. 34(3), pages 2038-2043.
    4. Lee, Kangoh, 1998. "Tax Evasion, Monopoly, and Nonneutral Profit Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 333-338, June.
    5. Goerke, Laszlo, 2001. "Tax Evasion in a Unionised Economy," IZA Discussion Papers 382, Institute of Labor Economics (IZA).
    6. Laszlo Goerke & Marco Runkel, 2011. "Tax evasion and competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(5), pages 711-736, November.
    7. David Joulfaian, 2009. "Bribes and Business Tax Evasion," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 227-244, December.
    8. Sang-Ho Lee, 2006. "Tax Evasion and Monopoly Output Decisions Revisited: Strategic Firm Behavior," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 5(1), pages 83-92, April.
    9. Lee, Kangoh, 1998. "Tax Evasion, Monopoly, and Nonneutral Profit Taxes," National Tax Journal, National Tax Association, vol. 51(n. 2), pages 333-38, June.

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