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Corporate Taxation, Tax Evasion, and Tax Design
Madzharova, Boryana ; Dušek, Libor (advisor) ; Steiner, Viktor (referee) ; Egger, Peter (referee)
In a letter to Jean-Baptiste Leroy in 1789, Benjamin Franklin observed that "...in this world nothing can be said to be certain, except death and taxes!" Individuals and businesses, however, certainly employ skilful ways to evade taxes until they are caught, if they ever are. Inevitably, the evolution of taxation systems and their accompanying legal frameworks result in adjustments to evasion/avoidance patterns and mechanisms, which are of interest to economists, social psychologists, and public administrations alike. The objective of this thesis is to study the effects of the widespread shift towards indirect taxation in the European Union (EU) on firms' tax compliance behaviour. This shift is generally characterised by rising consumption taxes, in particular the value-added tax (VAT) and falling corporate tax rates (CIT). While the policy of radical lowering of the corporate tax burden will likely lead to more honest profit disclosure, my research suggests that firms' evasion practices can migrate to other tax bases, such as social security, where plentiful savings from evasion schemes can be realised. When payroll taxes are significantly above the CIT rates, incentives emerge for companies to under-report wages, since under-stating labour costs is cheaper than paying full contributions. Chapter...
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