A Cost of Tax Planning

8 Pages Posted: 15 Oct 2004 Last revised: 31 Dec 2013

Yoram Y. Margalioth

Tel Aviv University - Buchmann Faculty of Law

Eyal Sulganik

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship

Rafi (Rafael) Eldor

Interdisciplinary Center (IDC) Herzliya - Arison School of Business

Yoseph M. Edrey

University of Haifa - Faculty of Law

Date Written: August 29, 2004

Abstract

The paper analyzes the case of tax planning that tilts the government gain/loss ratio below one, and provides a proof of a certain type of inefficiency caused by tax planning. As the paper shows, the tax imbalance distorts the firm's output level, providing the firm with an incentive to produce more than the social optimum. This inefficiency is different from the general inefficiency entailed by income taxation, captured by the conventional notion of excess burden. The paper also examines the determinants of this type of distortion and offers some policy implications.

Keywords: tax planning, imbalance, asymmetry, production, inefficiency

JEL Classification: H20, H26, H32, E23, D61, D20

Suggested Citation

Margalioth, Yoram Y. and Sulganik, Eyal and Eldor, Rafi (Rafael) and Edrey, Yoseph M., A Cost of Tax Planning (August 29, 2004). International Review of Law and Economics, Vol. 5, 2009. Available at SSRN: https://ssrn.com/abstract=593243 or http://dx.doi.org/10.2139/ssrn.593243

Yoram Y. Margalioth (Contact Author)

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel
+972-3-6407014 (Phone)
+972-3-6409576 (Fax)

Eyal Sulganik

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-9572307 (Phone)
972-9-9568605 (Fax)

Rafi (Rafael) Eldor

Interdisciplinary Center (IDC) Herzliya - Arison School of Business ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7234 (Phone)
972-9-956-3616 (Fax)

Yoseph M. Edrey

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905
Israel
972-4-824-0634 (Phone)
972-4-824-9247 (Fax)

HOME PAGE: http://law.haifa.ac.il/

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