Tax Planning: Theory and Modeling
DOI:
https://doi.org/10.54408/jabter.v1i6.100Keywords:
Tax Planning, Corporate Governance, Firm ValueAbstract
The majority of taxpayers, whether individuals or corporations, seek to reduce their tax burden or to benefit from a certain tax saving. In this sense, taxpayers resort to various legal or even illegal tax planning practices. In this article, we seek to deepen the understanding of the concept of tax planning and to offer, to the various readers, new theoretical and empirical indicators to understand the motivations behind fiscally aggressive behavior. Indeed, after presenting the theoretical framework of the notion of tax planning, we will discuss the main theoretical and empirical sources that have attempted to model and estimate the extent of tax planning. At the end of our review of the theoretical and empirical literature, we can argue that the deterrence theory, which has dominated the earlier literature on tax planning, is insufficient to explain fiscally aggressive behavior, and that the modeling of tax planning practices depends to a large extent on the context of the estimated study and on the interpretations of tax laws.
Downloads
References
Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1(3_4), 323_338.
Alm, J., Jackson, B. R., & McKee, M. (1992). Estimating the determinants of taxpayer compliance with experimental data. National Tax Journal, 107_114.
Alm, J., McClelland, G. H., & Schulze, W. D. (1992). Why do people pay taxes? Journal of Public Economics, 48(1), 21_38. https://doi.org/https://doi.org/10.1016/0047-2727(92)90040-M.
Alm, J., McClelland, G. H., & Schulze, W. D. (1999). Changing the social norm of tax compliance by voting. Kyklos, 52(2), 141_171. https://doi.org/https://doi.org/10.1111/j.1467-6435.1999.tb01440.x.
Arrow, K. J. (1996). The theory of risk-bearing: small and great risks. Journal of Risk and Uncertainty, 12(2), 103_111.
Ayers, B. C., Jiang, J., & Laplante, S. K. (2009). Taxable income as a performance measure: The effects of tax planning and earnings quality. Contemporary Accounting Research, 26(1), 15_54. https://doi.org/https://doi.org/10.1506/car.26.1.1.
Aytkhozhina, G., & Miller, A. (2019). State tax control strategies: Theoretical aspects. Contaduría y Administración, 63(2), 25.
Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2019). Tax aggressiveness and corporate transparency. The Accounting Review, 94(1), 45_69.
Bazart, C. (2000). La fraude fiscale: modélisation du face à face Etat-Contribuables (Université Montpellier). Retrieved from https://www.researchgate.net.
Beron, K. J., Tauchen, H. V, & Witte, A. D. (1988). A structural equation model for tax compliance and auditing. National Bureau of Economic Research Cambridge, Mass., USA.
Bhattacharya, S. (1979). Imperfect information, dividend policy, and" the bird in the hand" fallacy. The Bell Journal of Economics, 259_270.
Boukobza, F. (1995). Optimisation fiscale et localisation. Revue Internationale de Droit Comparé, 47(2), 385_402.
Bruce, D., Deskins, J., & Fox, W. F. (2007). On the extent, growth, and efficiency consequences of state business tax planning. Taxing Corporate Income in the 21st Century, 226, 253_254.
Cao, J., & Cui, Y. (2017). An alternative view on determinants of the effective tax rate: Evidence from Chinese listed companies. Emerging Markets Finance and Trade, 53(5), 1001_1014. https://doi.org/DOI: 10.1080/1540496X.2016.1256113.
Certo, S. T. (2003). Influencing initial public offering investors with prestige: Signaling with board structures. Academy of Management Review, 28(3), 432_446.
Chapman, D. S., Uggerslev, K. L., Carroll, S. A., Piasentin, K. A., & Jones, D. A. (2005). Applicant attraction to organizations and job choice: a meta-analytic review of the correlates of recruiting outcomes. Journal of Applied Psychology, 90(5), 928_944.
Chavy, P. (2017). Planification fiscale et réputation de la firme: quelles réalités? Revue de Lorganisation Responsable, 12(1), 53_65.
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics, 95(1), 41_61.
Clotfelter, C. T. (1983). Tax evasion and tax rates: An analysis of individual returns. The Review of Economics and Statistics, 65, 363_373.
Dell’Anno, R. (2009). Tax evasion, tax morale and policy maker’s effectiveness. Journal of Socio-Economics, 38(6), 988_997. https://doi.org/10.1016/j.socec.2009.06.005.
Derashid, C., & Zhang, H. (2003). Effective tax rates and the “industrial policy” hypothesis: evidence from Malaysia. Journal of International Accounting, Auditing and Taxation, 12(1), 45_62.
Desai, M. A. (2002). The corporate profit base, tax sheltering activity, and the changing nature of employee compensation. In National Bureau of Economic Research Working Paper Series, No. 8866. Retrieved from National Bureau of Economic Research Cambridge, Mass., USA website: http://www.nber.org/papers/w8866.
Desai, M. A., & Dharmapala, D. (2006). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics, 79(1), 145_179. https://doi.org/10.1016/J.JFINECO.2005.02.002
Devos, K. (2013). Factors influencing individual taxpayer compliance behaviour. Retrieved from https://www.worldcat.org/title/factors-influencing-individual-taxpayer-compliance-behaviour.
Dubin, J. A., & Wilde, L. L. (1988). An empirical analysis of federal income tax auditing and compliance. National Tax Journal, 61_74.
Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-Run Corporate Tax Avoidance. The Accounting Review, 83(1), 61_82.
Ehrhart, K. H., & Ziegert, J. C. (2005). Why are individuals attracted to organizations? Journal of Management, 31(6), 901_919.
Elffers, H. (2000). But taxpayers do cooperate. Cooperation in Modern Society. Promoting the Welfare of Communities, States and Organizations. London: Routledge, 184_194.
Feeny, S., Harris, M. N., & Gillman, M. (2002). Corporate & Statutory Tax Rates. SSRN Electronic Journal. https://doi.org/https://doi.org/10.2139/ssrn.309940.
Feinstein, J. S. (1991). An econometric analysis of income tax evasion and its detection. The RAND Journal of Economics, 14_35.
Forbes, J. B. (1987). Early intraorganizational mobility: Patterns and influences. Academy of Management Journal, 30(1), 110_125.
Frey, B. S. (1997a). A constitution for knaves crowds out civic virtues. The Economic Journal, 107(443), 1043_1053. https://doi.org/https://doi.org/10.1111/j.1468-0297.1997.tb00006.x.
Frey, B. S. (1997b). Not just for the money: An Economic Theory of Personal Motivation. Cheltenham, UK and Lyme: USA: Edward Elgar.
Frey, B. S. (2003). Deterrence and tax morale in the European Union. European Review, 11(3), 385_406. https://doi.org/https://doi.org/10.1017/S1062798703000346.
Frey, B. S., & Feld, L. P. (2002). Deterrence and morale in taxation: An empirical analysis. Available at SSRN 341380. https://doi.org/http://dx.doi.org/10.2139/ssrn.341380.
Friedland, N., Maital, S., & Rutenberg, A. (1978). A simulation study of income tax evasion. Journal of Public Economics, 10(1), 107_116.
Ftouhi, K., Ayed, A., & Zemzem, A. (2015). Tax planning and firm value: evidence from European companies. International Journal Economics & Strategic Management of Business Process, 4(1), 73_78.
Graetz, M. J., & Wilde, L. L. (1985). The economics of tax compliance: fact and fantasy. National Tax Journal, 38(3), 355_363.
Graham, J. R. (1996). Proxies for the corporate marginal tax rate. Journal of Financial Economics, 42(2), 187_221.
Graham, J. R. (2003). Taxes and corporate finance: A review. The Review of Financial Studies, 16(4), 1075_1129.
Gupta, S., & Newberry, K. (1997). Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data. Journal of Accounting and Public Policy, 16(1), 1_34. https://doi.org/https://doi.org/10.1016/S0278-4254(96)00055-5.
Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2_3), 127_178.
Harris, M. N., & Feeny, S. (2003). Habit persistence in effective tax rates. Applied Economics, 35(8), 951_958.
Janssen, B. (2005). Corporate effective tax rates in the netherlands. De Economist, 153(1), 47_66. https://doi.org/10.1007/s10645-004-7127-y.
Joint Committee on Taxation (JCT). (1983). Study of 1983 effective tax rates of selected large US corporations. Retrieved from https://www.jct.gov/publications.html?func=select&id=40.
Kim, K. A., & Limpaphayom, P. (1998). Taxes and Firm Size in Pacific-Basin Emerging Economies. Ournal of International Accounting, Auditing and Taxation, 7(1), 47_68. https://doi.org/https://doi.org/10.1016/S1061-9518(98)90005-2.
King, M., & Fullerton, D. (1983). The taxation of income from capital: A comparative study of the United States, the United Kingdom, Sweden and Germany (No. 1058). https://doi.org/10.3386/w1058.
Kirchler, E. (2007). The economic psychology of tax behaviour. Retrieved from https://www.worldcat.org/title/economic-psychology-of-tax-behaviour/oclc/706792411&referer=brief_results.
Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. The Quarterly Journal of Economics, 112(4), 1251_1288.
Koskela, E. (1983). A note on progression, penalty schemes and tax evasion. Journal of Public Economics, 22(1), 127_133.
Kotowski, M. H., Weisbach, D. A., & Zeckhauser, R. J. (2014). Audits as signals. In U. Chi. L. Rev. (No. Paper No. 651). https://doi.org/http://dx.doi.org/10.2139/ssrn.2311417.
Lawler, J. J. (1998). Not just for the money: An economic theory of personal motivation. Personnel Psychology, 51(3), 740. Retrieved from https://www.proquest.com/openview/1578b6105be668439bd28c1fe160bc19/1?pq-origsite=gscholar&cbl=36693.
Lazar, S. (2014). Determinants of the variability of corporate effective tax rates: Evidence from romanian listed companies. Emerging Markets Finance and Trade, Vol. 50, pp. 113–131. https://doi.org/10.2753/REE1540-496X5004S4007.
Leland, H. E., & Pyle, D. H. (1977). Informational asymmetries, financial structure, and financial intermediation. The Journal of Finance, 32(2), 371_387.
Lev, B., & Thiagarajan, S. R. (1993). Fundamental information analysis. Journal of Accounting Research, 31(2), 190_215.
Lewis, A. (1982). The social psychology of taxation. British Journal of Social Psychology, 21(2), 151_158.
Long, S., & Swingen, J. (1991). The conduct of tax-evasion experiments: Validation, analytical methods, and experimental realism. Tax Evasion: An Experimental Approach, 128_138.
Marie-Jeanne, C. (1999). Paiement du dividende en actions et théorie du signal. Économie et Sociétés. Série SG, Sciences de Gestion, 26(27), 273_298.
Menchaoui, I. (2015). Identification et impact des pratiques de gestion fiscale sur la performance fiscale des groupes de sociétés: une étude menée dans le contexte tunisien. Retrieved from https://tel.archives-ouvertes.fr/tel-01164369.
Mossin, J. (1968). Aspects of rational insurance purchasing. Journal of Political Economy, 76(4, Part 1), 553_568.
Omer, T. C., Molloy, K. H., & Ziebart, D. A. (1993). An investigation of the firm size—effective tax rate relation in the 1980s. Journal of Accounting, Auditing & Finance, 8(2), 167–182. Retrieved from https://journals.sagepub.com/doi/abs/10.1177/0148558X9300800206
Phillips, J. D. (2003). Corporate tax‐planning effectiveness: The role of compensation‐based incentives. The Accounting Review, 78(3), 847_874. https://doi.org/https://doi.org/10.2308/accr.2003.78.3.847.
Pinteaux, P. (2017). l’optimisation à l’évasion fiscale internationale (1/2). Économie et Management, 163. https://doi.org/https://cdn.reseau-canope.fr.
Polinsky, A. M., & Shavell, S. (2000). The economic theory of public enforcement of law. Journal of Economic Literature, 38(1), 45_76. https://doi.org/10.1257/jel.38.1.45.
Porcano, T. (1986). Corporate tax rates: Progressive, proportional, or regressive. Journal of the American Taxation Association, 7(2), 17_31.
Posner, E. A. (2000). Law and social norms: The case of tax compliance. Virginia Law Review, 86(8), 1781_1819. Retrieved from http://www.jstor.org/stable/1073829.
Pyle, D. J. (1991). The economics of taxpayer compliance. Journal of Economic Surveys, 5(2), 163_198. https://doi.org/https://doi.org/10.1111/j.1467-6419.1991.tb00131.x.
Rego, S. O. (2003). Tax-Avoidance Activities of U . S . Multinational Corporations. Contemporary Accounting Research, 20(4), 805_833. https://doi.org/10.1506/VANN-B7UB-GMFA-9E6W.
Rosenbaum, J. E. (1979). Tournament mobility: Career patterns in a corporation. Administrative Science Quarterly, 24(2), 220_241. https://doi.org/10.2307/2392495.
Ross, S. A. (1977). The determination of financial structure: the incentive-signalling approach. The Bell Journal of Economics, 8(1), 23_40. https://doi.org/https://doi.org/10.2307/3003485.
Rynes, S. L. (1989). Recruitment Research and Applicant Attraction: What Have We Learned? Retrieved from https://ecommons.cornell.edu/handle/1813/77275
Rynes, S. L., Bretz Jr, R. D., & Gerhart, B. (1991). The importance of recruitment in job choice: A different way of looking. Personnel Psychology, 44(3), 487_521.
Schwartz, R. D., & Orleans, S. (1967). On legal sanctions. The University of Chicago Law Review, 34(2), 274_300.
Shevlin, T. (1987). Taxes and off-balance-sheet financing: research and development limited partnerships. Accounting Review, 480_509.
Slemrod, J. (2004). The economics of corporate tax selfishness. National bureau of economic research.
Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355-374.
Stickney, C. P., & McGee, V. E. (1982). Effective corporate tax rates the effect of size, capital intensity, leverage, and other factors. Journal of Accounting and Public Policy, 1(2), 125_152.
Torgler, B. (2002). Speaking to theorists and searching for facts: Tax morale and tax compliance in experiments. Journal of Economic Surveys, 16(5), 657_683. https://doi.org/https://doi.org/10.1111/1467-6419.00185.
Vandenbussche, H., Crabbé, K., & Janssen, B. (2005). Is there regional tax competition? Firm level evidence for Belgium. Economist, 153(3), 257_276. https://doi.org/10.1007/s10645-005-1988-6.
Wahab, N. S. A., & Holland, K. (2012). Tax planning, corporate governance and equity value. The British Accounting Review, 44(2), 111_124.
Wilkie, P. (1988). Corporate average effective tax rates and inferences about relative tax preferences. The Journal of the American Taxation Association, 10(1), 75_88.
Wilkie, P. J., & Limberg, S. (1990). The relationship between firm size and effective tax rate: A reconciliation of Zimmerman (1983) and Porcano (1986). Journal of the American Taxation Association, 11(1), 76–91. Retrieved from http://web.b.ebscohost.com/ehost/detail/detail?vid=0&sid=6a2bdeb8-52f6-4963-976f-19d37bab06f4%40pdc-v-sessmgr03&bdata=Jmxhbmc9ZnImc2l0ZT1laG9zdC1saXZl#AN=6147328&db=bsu
Witte, A. D., & Woodbury, D. F. (1985). The effect of tax laws and tax administration on tax compliance: The case of the US individual income tax. National Tax Journal, 1_13.
Yee, C. S., Sapiei, N. S., & Abdullah, M. (2018). Tax avoidance, corporate governance and firm value in the digital era. Journal of Accounting and Investment, 19(2). https://doi.org/10.18196/jai.190299.
Yitzhaki, S. (1974). A Note on Allingham and Sandmo. Journal of Public Economics, 3(2), 201_202.
Zimmerman, J. L. (1983). Taxes and firm size. Journal of Accounting and Economics, 5, 119_149.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Saadia Kouroub, Lahcen Oubdi
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This journal is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
