No abstract

The multilateral adoption of the automatic exchange of information (AEI) on bank accounts held by nonresidents was a breakthrough in the fight against cross-border tax evasion, which led to a substantial reduction in the value of bank deposits and investment portfolios in traditional tax havens. However, there is suspicion that sophisticated tax evaders engage in regulatory arbitrage of AEI provisions. We examine whether two widely discussed secrecy schemes, namely golden visas and anonymous trusts and shell corporations, have been used to circumvent information reporting. Relying on a difference-indifference design, we only find scattered evidence for use of the secrecy schemes. Overall, our results suggest that regulatory arbitrage is not yet widespread, but it seems to increase over time. We thus provide evidence for the current effectiveness of the AEI but also show that closing remaining loopholes is of utmost importance. We link our findings to debates about the (im)possibility of re-embedding neoliberal globalization.

Why have Organisation for Economic Co-operation and Development (OECD) governments raised taxes on dividends at the shareholder level since 2008? Previous research points to the importance of budget deficits and voter demand for compensatory fairness in the aftermath of the financial crisis. We complement this literature by showing that the effect of domestic drivers of tax increases on capital income crucially depends on the level of financial transparency in a country’s investment network. Low financial transparency increases the risk of capital flight in response to a tax hike, whereas high financial transparency reduces this risk. Hence, governments facing fiscal pressure become more likely to raise taxes on capital income when transparency is high. To substantiate our argument, we construct an original indicator of financial transparency in countries’ investment networks, which we utilize in a regression analysis of tax reforms by 204 cabinets in 35 OECD countries between 2001 and 2018.

Does government partisanship still matter in the era of welfare retrenchment? The comprehensive quantitative research on this question offers contradicting answers. Our meta-analysis demonstrates that the results of published empirical studies depend on a number of the studies’ characteristics. Focusing on studies on retrenchment-prone ‘old social policies’, we show that the single most important factor affecting the results on partisanship is the choice of the dependent variable. In general, studies using entitlements are four times more likely to find partisan effects than studies based on social spending. Furthermore, partisan effects are more pronounced in class-related programmes like unemployment benefits and sick pay than in lifecourse-related welfare programmes such as pensions. Finally, we show a clear decline of partisanship over time. Some recent studies, however, indicate that innovations in terms of operationalisation and measurement of the independent variable may bring new life to the debate on the persistence of partisanship.

Political economy research commonly expects a positive relationship between income inequality and the demand for redistribution, which is increasingly attributed to inequality aversion grounded in norms and values. However, people are not averse to a proportion of inequality that fairly results from differences in individual merit. Therefore, this study argues that the effect of inequality crucially depends on the extent to which income fairness is realized. It is primarily unfair inequality, rather than overall inequality, that affects individual redistribution support. The argument is substantiated with an empirical quantification of unfair inequality that measures whether individuals have unequal returns to their labor-related merits. Multilevel models using repeated cross-sections show that this quantification of unfair inequality can explain both within- and between-country variance in redistribution preferences and that it is a better predictor than overall inequality. The results suggest that public opinion cannot be inferred directly from the overall level of inequality.