Tax Evasion and Inequality

Abstract

Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01 percent richest households evade about 25 percent of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5 percent throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality. (JEL D31, H24, H26, K34)

Effects of signalling tax evasion on redistribution and voting preferences: Evidence from the Panama Papers

“…This is in line with the literature showing that redistributive preferences may have "cultural" determinants that are stable over time [25]. The results are stable to the inclusion of country dummies (see Columns (2) and (3)). This constitutes proof that the reaction is consistent among individuals and robust to country heterogeneity.…”

“…Note that the magnitude of the effect is larger in the ESS than in the BES dataset; this is because both datasets have different structures. Columns (2) and (3) show that after the leak, the treatment generates a positive effect on stated redistribution outcomes across all European countries. This is in line with the literature showing that redistributive preferences may have "cultural" determinants that are stable over time [25].…”

“…A recent and substantial strand of literature investigates the extent of tax evasion with the aim to quantify it. This literature namely shows that top-income tax evasion is substantial and occurs especially at the very top of the income distribution [2]. Using information from the Panama Papers, they find that, on average, 3% of personal taxes are evaded while between 25% and 30% are evaded by the top 0.01%.…”

Tax Policy and Inclusive Growth

“…Using evidence from the Panama papers, it appears that a significant portion of these behavioral responses is due to evasion; and this response tends to increase with the level of wealth, i.e. evasion is much larger for the ultra-wealthy (Alstadsaeter et al 2019).…”

Kva er arbeid – eigentleg? Cato Wadelog Sysselsettingsutvalet

“…9. Det er vesentleg meir pengar å hente i å få dei rikaste rike i Noreg til å faktisk betala skatt til landet ifølgje analysar av registerdata kopla til informasjon henta frå dei såkalla «Panama-papers» og «Swiss leaks» (Alstadsaeter, Johannesen & Zucman, 2019).…”