Employer's Reporting of Worker's Income, Incentive Contracts, and Tax Compliance
Journal
經濟論文叢刊
Journal Volume
41
Journal Issue
4
Pages
339-363
Date Issued
2013-12
Date
2013-12
Author(s)
楊建成
Abstract
This paper analyzes the role played by the firm in tax compliance. The IRS cannot observe the worker's income, and so the employer has to report the worker's income to the IRS. The IRS can audit the worker when there is a possibility of tax evasion. We argue that the report made by the employer can become a tool used to control the worker's incentive to work. Compared to the second-best contract, it is possible that the employer can promise to report a lower wage income and induce the worker to put forth more effort, when the IRS audits the worker less frequently. Both the employer and the worker may be better off under such a reporting system.
Subjects
薪資申報(income reporting), 逃漏稅(tax evasion), 誘因契約 (incentive contract)
Type
journal article
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