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Multitasking in Corporate Tax Evasion

Author

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  • Philipp Meyer-Brauns

Abstract

This paper analyzes firms' tax evasion behavior in a principal-agent model with multitasking. A generalist firm-owner hires a specialist tax manager who chooses the quantity as well as the quality of tax evasion. Higher quality lowers the firm's expected fine for tax evasion. In contrast to earlier literature, we find that asymmetric information inside firms may enhance the efficacy of tax enforcement. This occurs because highly sophisticated tax evasion activities are often difficult to understand and assess for the generalist shareholder, who commissions fewer such activities as a result of this informational disadvantage.

Suggested Citation

  • Philipp Meyer-Brauns, 2013. "Multitasking in Corporate Tax Evasion," Working Papers tax-mpg-rps-2013-05, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2013-05
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    More about this item

    Keywords

    Corporate Tax Evasion; Principal-Agent Model; Tax Enforcement; Multitasking;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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