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Tax Overpayments, Tax Evasion, and Book-Tax Differences

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  • Laszlo Goerke

Abstract

A strictly risk-averse manager makes joint decisions on a firm's tax payments and book profit declarations according to accounting standards. It is analysed how the incentives to overpay or evade taxes and to inflate book profits are influenced by (1) the composition of the manager's remuneration, (2) the ability to control the manager's actions, (3) the costs of making untruthful profit declarations, and (4) the tax rate. If the firm's owner or the government takes into account these effects when pursuing his own objectives, the changes in tax payments and book profit declarations become theoretically more ambiguous.

Suggested Citation

  • Laszlo Goerke, 2008. "Tax Overpayments, Tax Evasion, and Book-Tax Differences," CESifo Working Paper Series 2212, CESifo.
    • Handle: RePEc:ces:ceswps:_2212
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    Cited by:

    1. Laszlo Goerke, 2019. "Corporate social responsibility and tax avoidance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(2), pages 310-331, April.

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    More about this item

    Keywords

    executive compensation; financial accounting; tax evasion;
    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
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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