The Optimal Structure of Commodity Taxation in a Monopoly with Tax Avoidance or Evasion
AbstractIf tax obligations are met, the balanced-budget substitution of an ad valorem tax on output for a specific tax not only raises a monopolistâ€™s production but also represents a Pareto improvement. However, if tax avoidance or evasion is feasible and the marginal costs of such actions decline with the legal tax burden, a monopolist will respond to a balanced-budget substitution of an ad valorem tax for a specific tax by reducing output, while profits remain constant. Therefore, in the presence of tax avoidance or evasion activities, a move toward specific taxation can represent a Pareto improvement.
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Volume (Year): 40 (2012)
Issue (Month): 4 (July)
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- Goerke, Laszlo, 2011. "The optimal structure of commodity taxation in a monopoly with tax avoidance or evasion," University of Tuebingen Working Papers in Economics and Finance 8, University of Tuebingen, Faculty of Economics and Social Sciences.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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