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Monopolists' Profit Tax Evasion Revisited

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  • T. C. Michael Wu
  • C. C. Yang

Abstract

This article revisits the issues of neutrality and separability for a monopolistic firm. It is shown that as long as the monopolistic firm has objectives other than maximizing profit, then in general: (1) profit taxes will not be neutral, and (2) the firm’s production and evasion decisions will not be separable from each other. The authors argue that the nonneutrality result of profit taxes is quite robust; however, there are plausible exceptions to the nonseparability result of profit taxes.

Suggested Citation

  • T. C. Michael Wu & C. C. Yang, 2011. "Monopolists' Profit Tax Evasion Revisited," Public Finance Review, , vol. 39(6), pages 831-840, November.
    • Handle: RePEc:sae:pubfin:v:39:y:2011:i:6:p:831-840
    DOI: 10.1177/1091142111424277
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    References listed on IDEAS

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