December 17, 2013

big government and big corporations

Filed under:, , — cwage @ 3:39 am

An interesting, if obvious, observation as to why large government's success hinges on the existence and success of large corporations:

The key mechanism that makes third-party tax enforcement successful is the combination of verifiable book evidence that is common knowledge within the firm and a large number of employees, as any single employee can denounce collusive tax cheating between employees and the employer by revealing true books to the government.

From Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries.

  • Colin McCormack

    The compliance rate for employees of corporations is much higher than that for independent contractors.