Tax Evasion in a Unionized Economy

17 Pages Posted: 28 Oct 2001

See all articles by Laszlo Goerke

Laszlo Goerke

University of Trier - Institute of Labour Law and Industrial Relations in the European Union; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: November 2001

Abstract

In a unionized labor market, a substitution of a payroll for an income tax will not alter employment if tax obligations are fulfilled. However, if workers or firms can evade taxes, this irrelevance result might no longer apply. This will especially be the case if the fine for tax evasion depends on undeclared income or on wage payments or if withholding regulations prevent optimal evasion choices. In such instances, tax evasion opportunities make the legal incidence of taxes an important determinant of their economic incidence and employment can rise with a substitution of an income for a payroll tax.

Keywords: Economic Incidence, Legal Incidence, Penalty, Tax Evasion, Trade Union

JEL Classification: H22, H26, J51, J64

Suggested Citation

Goerke, Laszlo, Tax Evasion in a Unionized Economy (November 2001). Available at SSRN: https://ssrn.com/abstract=288290

Laszlo Goerke (Contact Author)

University of Trier - Institute of Labour Law and Industrial Relations in the European Union ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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IZA Institute of Labor Economics

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