Economics of Governance

, Volume 9, Issue 2, pp 177–196 | Cite as

Bureaucratic corruption and profit tax evasion

Original Paper

Abstract

Firms may evade taxes on profits and can also avoid fulfilling legal restrictions on production activities by bribing bureaucrats. It is shown that the existence of tax evasion does not affect corruption activities at the firm level, while the budgetary repercussions of tax evasion induce less corruption. Policy measures which alter the gains or losses from corruption have a non-systematic impact on tax evasion behaviour.

Keywords

Corruption Firms Tax evasion 

JEL Classification Numbers

D 73 H 25 H 26 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Alm J (1999). Tax compliance and tax administration. In: Hildreth WB, Richardson JA (eds). Handbook on taxation. Marcel Dekker, Inc., New York, pp. 741–768Google Scholar
  2. Besley T, McLaren J (1993) Taxes and bribery: the role of wage incentives. Econ J 103(416):119–141CrossRefGoogle Scholar
  3. Bowles R (1999). Tax policy, tax evasion and corruption in economies in transition. In: Feige EL, Ott K (eds). Underground economies in transition – unrecorded activity, tax evasion, corruption and organized crime. Ashgate, Aldershot, pp 67–86Google Scholar
  4. Chander P, Wilde L (1992) Corruption in tax administration. J Public Econ 49(3):333–349CrossRefGoogle Scholar
  5. Chu CYC (1990) A model of income tax evasion with venal tax officials: the case of Taiwan. Public Finance/ Finances Publiques 45(3):392–408Google Scholar
  6. Dietrich U, Junker A (2003) Schwellenwerte in arbeitsrechtlichen Gesetzen (Threshold levels in labour laws). Neue Zeitschrift für Arbeitsrecht 19:1057–1068Google Scholar
  7. Friedman E, Johnson S, Kaufman D, Zoido-Lobaton P (2000) Dodging the grabbing hand: the determinants of unofficial activity in 69 countries. J Public Econ 76(3):459–493CrossRefGoogle Scholar
  8. Hindriks J, Keen M, Muthoo A (1999) Corruption, extortion, and evasion. J Public Econ 74(3):395–430CrossRefGoogle Scholar
  9. Johnson S, Kaufman D, Zoido-Lobaton P (1999) Corruption, public finances, and the unofficial economy. The World Bank, WPS 2169Google Scholar
  10. Kaufmann D, Wei S (1999) Does “grease money” speed up the wheels of commerce? NBER Working Paper No. 7093Google Scholar
  11. Lee K (1998) Tax evasion, monopoly, and nonneutral profit taxes. Nat Tax J 51(2):333–338Google Scholar
  12. Martinez-Vazquez J, Rider M (2005) Multiple modes of tax evasion: theory and evidence. Nat Tax J 68(1):51–76Google Scholar
  13. Panteghini PM (2000) Tax evasion and entrepreneurial flexibility. Public Finance Rev 28(3):199–209CrossRefGoogle Scholar
  14. Sanyal A (2000) Audit hierarchy in a corrupt tax administration. J Comp Econ 28(2):364–378CrossRefGoogle Scholar
  15. Sanyal A (2002) Audit hierarchy in a corrupt tax administration: a note with qualifications and extensions. J Comp Econ 30(2):317–324CrossRefGoogle Scholar
  16. Sanyal A, Gang IN, Goswami O (2000) Corruption, tax evasion and the Laffer curve. Public Choice 105(1–2):61–78CrossRefGoogle Scholar
  17. Shleifer A, Vishny R (1993) Corruption. Q J Econ 108(3):599–617CrossRefGoogle Scholar
  18. Tanzi V, Davoodi HR (1998). Corruption, public investment and growth. In: Shibata H, Ihori T (eds). The welfare state, public investment and growth. Springer, Berlin Heidelberg NewYork, pp. 41–60Google Scholar
  19. Tanzi V, Davoodi HR (2001). Corruption, growth, and public finances. In: Arvind KJ (eds). Political economy of corruption. Routledge, London. pp. 89–110Google Scholar
  20. Yaniv G (1995) A note on the tax evading firm. Nat Tax J 48(1):113–120Google Scholar
  21. Yaniv G (1996) Tax evasion and monopoly output decisions: note. Public Finance Q 24(4):501–505CrossRefGoogle Scholar
  22. Yitzhaki S (1974) A note on income tax evasion: a theoretical analysis. J Public Econ 3(2):201–202CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2006

Authors and Affiliations

  1. 1.Department of EconomicsEberhard Karls University TübingenTübingenGermany
  2. 2.IZABonnGermany
  3. 3.CESifoMünchenGermany

Personalised recommendations