Abstract
Decisions by firms and individuals on the extent of their tax payments have generally been treated as separate choices. Empirically, a positive relationship between corporate and personal income tax evasion can be observed. The theoretical analysis in this paper shows that a manager's decision on the firm's behaviour will be independent of his personal preferences if the gain from reducing corporate tax payments is certain, as in the case of tax avoidance. If, however, the firm evades taxes so that the manager's income depends on whether the firm's activities are detected or not, corporate and personal income tax evasion choices cannot be separated.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1, 323–338.
Alm, J. (1988). Compliance costs and the tax avoidance-tax evasion decision. Public Finance Quarterly, 16(1), 31–66.
Alm, J. (1999). Tax compliance and tax administration. In W. B. Hildreth, & A. R. James (Eds.), Handbook on Taxation, (pp. 741–768). New York, NY: Marcel Dekker, Inc.
Alm, J., & McCallin, N. J. (1990). Tax avoidance, tax evasion, and portfolio choice. Public Finance/Finances Publiques, 45(2), 193–200.
Andreoni, J., Erard, B., & Feinstein, J. (1998). Tax compliance. Journal of Economic Literature, 36(2), 818–860.
Baldry, J. C. (1987). Income tax evasion and the tax schedule: Some experimental results. Public Finance/ Finances Publiques, 42(3), 357–383.
Balestrino, A., & Galmarini, U. (2003). Imperfect tax compliance and the optimal provision of public goods. Bulletin of Economic Research, 55(1), 37–52.
Chen, K.-P., & Chu., C.Y. C. (2005). Internal control vs. external manipulation: a model of corporate income tax evasion. Rand Journal of Economics, 36(1), 151–164.
Cowell, F. A. (1990a). Cheating the Government—The Economics of Evasion. Cambridge (Massachusetts) and London: The MIT Press.
Cowell, F. A. (1990b). Tax sheltering and the cost of evasion. Oxford Economic Papers, 42(1), 231–243.
Crocker, K. J., & Slemrod, J. (2005). Corporate tax evasion with agency costs. Journal of Public Economics, 89, 1593–1610.
Joulfaian, D. (2000). Corporate income tax evasion and managerial preferences. Review of Economics and Statistics, 82, 698–701.
Landskroner, Y., Paroush, J., & Swary, I. (1990). Tax evasion and portfolio decisions. Public Finance/Finances Publiques, 45(3), 409–422.
Lee, K. (1995). Risk-taking and business income tax evasion. Public Finance/Finances Publiques, 50(1), 106–120.
Lee, K. (1998). Tax evasion, monopoly, and nonneutral profit taxes. National Tax Journal, 51, 333–338.
Marchese, C. (2004). Taxation, black markets, and other unintended consequences. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance, (pp. 237–273). Boston et al.: Kluwer Academic Publishers.
Marelli, M. (1984). On indirect tax evasion. Journal of Public Economics, 25, 181–196.
Marelli, M., & Martina, R. (1988). Tax evasion and strategic behaviour of the firms. Journal of Public Economics, 37, 55–69.
Martinez-Vazquez, J., & Rider, M. (2005). Multiple modes of tax evasion: theory and evidence. National Tax Journal, 68(1), 51–76.
Panteghini, P. M. (2000). Tax evasion and entrepreneurial flexibility. Public Finance Review, 28, 199–209.
Slemrod, J., & Yitzhaki, S. (2002). Tax avoidance, evasion, and administration, In A. J. Auerbach & M. Feldstein (Eds.), Handbook of Public Economics. (Vol. 3, pp. 1423–1470). Elsevier: Amsterdam et al.
Wang, L.F. S., & Conant, J. L. (1988). Corporate tax evasion and output decisions of the uncertain monopolist. National Tax Journal, 41, 579–581.
Wrede, M. (1995). Tax evasion and risk-taking: is tax evasion desirable? Public Finance/Finances Publiques, 50(2), 303–316.
Yaniv, G. (1995). A note on the tax evading firm. National Tax Journal, 48, 113–120.
Yaniv, G. (1996). Tax evasion and monopoly output decisions: note. Public Finance Quarterly, 24, 501–505.
Yaniv, G. (1999). Tax evasion, risky laundering, and optimal deterrence policy. International Tax and Public Finance, 6, 27–38.
Yitzhaki, S. (1974). A note on income tax evasion: A theoretical analysis. Journal of Public Economics, 3, 201–202.
Author information
Authors and Affiliations
Corresponding author
Additional information
Jel Code H 24 · H 25 · H 26
Rights and permissions
About this article
Cite this article
Goerke, L. Corporate and personal income tax declarations. Int Tax Public Finance 14, 281–292 (2007). https://doi.org/10.1007/s10797-006-9001-0
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10797-006-9001-0