Bypassing Progressive Taxation: Fraud and Base Erosion in the Spanish Income Tax (1970-2001)

Hetland, Sara Torregrosa

doi:10.2139/ssrn.2688624

Cited by 6 publications

(3 citation statements)

References 53 publications

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“…4. Regarding Spain, see Torregrosa-Hetland (2015) for an overview on previous estimates of income tax evasion.…”

Section: Inequality In Tax Evasionmentioning

confidence: 99%

“…The behaviour of these non-filers is certainly a part of fraud in an aggregate sense, and was a problem of considerable magnitude in Spain at the beginning of the period, as in other economies at similar levels of development. See Torregrosa-Hetland (2015) for an approximation to its impact, obtained by a discrepancy analysis between tax data and national accounts.…”

Section: Inequality In Tax Evasionmentioning

confidence: 99%

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Inequality in tax evasion: the case of the Spanish income tax

Hetland

2020

AEA

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Purpose The purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach The approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income but introduces two methodological innovations, which could be useful for further studies: correction for sample selection with a Heckman two-step setting and the calculation of different evasion rates for top incomes with an interaction term. Findings Evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 per cent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 per cent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 per cent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should, therefore, be revised upwards. Originality/value This is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.

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“…4. Regarding Spain, see Torregrosa-Hetland (2015) for an overview on previous estimates of income tax evasion.…”

Section: Inequality In Tax Evasionmentioning

confidence: 99%

Section: Inequality In Tax Evasionmentioning

confidence: 99%

Inequality in tax evasion: the case of the Spanish income tax

Hetland

2020

AEA

View full text Add to dashboard Cite

show abstract

“…The available evidence suggests tax evasion might likely upward bias progressivity in Spain because evasion in the total tax base is increasing as we move towards the top of the income distribution (Torregrosa, 2015). Even though tax evasion has decreased in the last 20 years in Spain, it is still a nonnegligible part of income.…”

mentioning

confidence: 99%