Volume 8 - Number 1 | March 2024
Randomized tax deadlines can help economy
Julio Urenda, and Olga Kosheleva
Abstract:
Purpose
While the main purpose of reporting – e.g. reporting for taxes – is to gauge the economic state of a company, the fact that reporting is done at pre-determined dates distorts the reporting results. For example, to create a larger impression of their productivity, companies fire temporary workers before the reporting date and re-hire then right away. The purpose of this study is to decide how to avoid such distortion.
Design/methodology/approach
This study aims to come up with a solution which is applicable for all possible reasonable optimality criteria. Thus, a general formalism for describing and analyzing all such criteria is used.
Findings
This study shows that most distortion problems will disappear if the fixed pre-determined reporting dates are replaced with individualized random reporting dates. This study also shows that for all reasonable optimality criteria, the optimal way to assign reporting dates is to do it uniformly.
Research limitations/implications
This study shows that for all reasonable optimality criteria, the optimal way to assign reporting dates is to do it uniformly.
Practical implications
It is found that the individualized random tax reporting dates would be beneficial for economy.
Social implications
It is found that the individualized random tax reporting dates would be beneficial for society as a whole.
Originality/value
This study proposes a new idea of replacing the fixed pre-determining reporting dates with randomized ones. On the informal level, this idea may have been proposed earlier, but what is completely new is our analysis of which randomization of reporting dates is the best for economy: it turns out that under all reasonable optimality criteria, uniform randomization works the best..
References:
- Amat, O. and Gowthorpe, C. (2004), “Creative Accounting: nature, incidence and ethical issues”, Economics Working Paper 749, Universitat Pompeu Fabra, Barcelona, Department of Economics and Business.
- de la Torre, I. (2008), Creative Accounting Exposed, Palgrave Macmillan, London.
- Fishburn, P.C. (1969), Utility Theory for Decision Making, John Wiley & Sons, New York.
- Fishburn, P.C. (1988), Nonlinear Preference and Utility Theory, The John Hopkins Press, Baltimore, Maryland.
- Griffiths, I. (1992), Creative Accounting: How to Make Your Profits what You Want Them to Be, Routledge, London.
- Jones, M.J. (Ed.), (2011), Creative Accounting, Fraud and International Accounting Scandals, John Wiley & Sons, Chishester, UK.
- Kreinovich, V. (2014), “Decision making under interval uncertainty (and beyond)”, in Guo, P. and Pedrycz, W. (Eds), Human-Centric Decision-Making Models for Social Sciences, Springer-Verlag, pp. 163-193.
- Luce, R.D. and Raiffa, R. (1989), Games and Decisions: Introduction and Critical Survey, Dover, New York.
- Mulford, C.W. and Comiskey, E.E. (2005), The Financial Numbers Game: Detecting Creative Accounting Practices, Wiley, New York.
- Nguyen, H.T. and Kreinovich, V. (1997), Applications of Continuous Mathematics to Computer Science, Kluwer, Dordrecht.
- Nguyen, H.T., Kosheleva, O. and Kreinovich, V. (2009), “Decision making beyond Arrow's ‘impossibility theorem’, with the analysis of effects of collusion and mutual attraction”, International Journal of Intelligent Systems, Vol. 24 No. 1, pp. 27-47.
- Nguyen, H.T., Kreinovich, V., Wu, B. and Xiang, G. (2012), Computing Statistics under Interval and Fuzzy Uncertainty, Springer-Verlag, Berlin, Heidelberg.
- Oliveras, E. and Amat, O. (2004), “Ethics and creative accounting: some empirical evidence on accounting for intangibles in Spain”, Economics Working Paper 732, Universitat Pompeu Fabra, Barcelona, Department of Economics and Business.
- Raiffa, H. (1997), Decision Analysis, McGraw-Hill, Columbus, Ohio.