Hidden Treasure

Beer, Sebastian; Coelho, Maria Alice Zarur; Leduc, Sebastien

doi:10.5089/9781513519975.001

Cited by 6 publications

References 13 publications

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Tax evasion, technology, and inequality

Alm

2021

Econ Gov

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Ensuring compliance with the tax laws is an enduring challenge for all governments. However, the methods by which governments enforce the tax laws, and by which individuals and firms evade their taxes, change over time, due at least in part to changing technology. In this paper I examine how changing technology, especially changes driven by the transformation of information into digital formats for use by computers, seems likely to affect tax evasion in the years ahead. I argue that many of these changes in technology will improve the ability of governments to decrease tax evasion, mainly by increasing the flow of information to governments. However, I also argue that these changes in technology will open up new avenues by which some individuals and some firms can evade (and avoid) taxes. At this point it is unclear which trend will dominate, so that the effects of technology on the overall level of tax evasion is uncertain. Even so, I believe that the distributional effects of these technological changes are more predictable, given the differential effects of technology on the abilities of individuals of different levels and types of income to evade their taxes. Indeed, I argue that changing technology will make evasion increasingly difficult for most taxpayers, especially those subject to employer withholding and third party information reporting, but that evasion will be increasingly viable for a small number of taxpayers, especially very high income taxpayers. Regardless of the overall impact of technology on the level of tax evasion, I conclude that the effects of technology will likely increase economic inequality.

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Tax evasion, technology, and inequality

Alm

2021

Econ Gov

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Behavioural responses to a wealth tax

Advani

Tarrant

2021

Fiscal Studies

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In this paper, we review the existing empirical evidence on how individuals respond to the incentives created by a net wealth tax. Variation in the overall magnitude of behavioural responses is substantial: estimates of the elasticity of taxable wealth vary by a factor of 800. We explore three key reasons for this variation: tax design, context and methodology. We then discuss what is known about the importance of individual margins of response and how these interact with policy choices. Finally, we use our analysis to systematically narrow down and reconcile the range of elasticity estimates. We argue that a well‐designed wealth tax would reduce the tax base by 7–17 per cent if levied at a tax rate of 1 per cent.

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Using “responsive regulation” to reduce tax base erosion

Alm

Gerbrands

Kirchler

2020

Regulation & Governance

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How can governments get individuals and firms to pay taxes, especially given increasing tax base erosion via tax evasion, tax avoidance, and money laundering? In this paper we discuss the many different perspectives to explain why people pay – and do not pay – their taxes, especially perspectives based on “responsive regulation,” and we use then these perspectives to suggest policies that governments may use to improve tax collections. We first describe an approach that is based on a single individual pursuing a single motivation by choosing a single method (tax evasion) and operating in a single country. This perspective has generated important insights, but it nonetheless has significant limitations. As a result, we then argue that this perspective must be expanded to include additional actors in the field, all pursuing additional motivations. We also expand our discussion to include additional methods of tax base erosion like tax avoidance and money laundering, as well as additional countries. We argue that explaining behavior and then devising appropriate policies requires incorporating all of these additional considerations. We also discuss the likely impact of technological innovations both on the ability of governments to collect taxes and on the ability of private agents to reduce their taxes. An important contribution of our paper is that we simulate the effects of all of these expansions to the basic model using a novel agent‐based model that is fully grounded in theory and calibrated for 33 European economics. We use this model to simulate the impacts over time of various reforms, especially reforms that implement international information‐sharing programs, by comparing tax base erosion in the absence of these reforms to erosion in their presence. Our simulation results demonstrate the importance of using a fully specified theoretical model that goes well beyond the standard economics of crime approach when considering the effects of government policy innovations. We conclude with recommendations that can in principle reduce tax base erosion via evasion, avoidance, and money laundering in the current multi‐dimensional environment as derived from the responsive regulation framework. However, these recommendations require a firm commitment from governments to their tax administrations, and these recommendations also cannot be introduced unilaterally by a single country but require international cooperation, especially via information sharing across borders.

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Hidden Treasure

Cited by 6 publications

References 13 publications

Tax evasion, technology, and inequality

Tax evasion, technology, and inequality

Behavioural responses to a wealth tax

Using “responsive regulation” to reduce tax base erosion

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