Working Paper: CEPR ID: DP12781
Authors: Annette Alstadsaeter; Niels Johannesen; Gabriel Zucman
Abstract: This paper estimates the size and distribution of tax evasion. We combine random audits, tax amnesties, and leaks from offshore financial institutions matched to wealth records in Scandinavia. Tax evasion rises sharply with wealth: 3% of personal taxes are evaded on average, versus 25%–30% in the top 0.01% of the wealth distribution. A model of the supply of evasion services can explain this gradient. Taking tax evasion into account increases inequality substantially. After using tax amnesties, evaders do not seem to increase legal tax avoidance, suggesting that fighting evasion can allow governments to collect more taxes from the wealthy.
Keywords: Tax evasion; Inequality; Wealth distribution; Public economics
JEL Codes: H26; D63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wealth (D14) | tax evasion (H26) |
| tax evasion (H26) | inequality (D63) |
| wealth (D14) | propensity to evade taxes (H26) |
| tax evasion (H26) | tax revenue (H27) |