Corruption is like a "tax" on firms because:

Question

Quizplus · Accepted Answer

Corruption adds an additional cost to firms' production expenditures in the form of bribes. This reduces the potential profits that the firm could have earned and is, therefore, similar to an additional tax. The option A and C are incorrect since firms cannot file for a refund for the money paid as bribes and bribes are not paid to avoid paying corporate taxes. Option D is not correct since bribes are not a fixed percentage of profits.

Corruption Is Like a "Tax" on Firms Because