Working Paper: CEPR ID: DP18206
Authors: Bertrand Garbinti; Jonathan Goupille-Lebret; Mathilde Munoz; Stefanie Stantcheva; Gabriel Zucman
Abstract: We study a French wealth tax reform that starkly reduced the information some taxpayers must report to the tax authority. Using a new dynamic bunching approach we estimate the average response to the reform, the share of compliers, and the local average treatment effect. The annual wealth growth rate of treated taxpayers falls by 0.5 percentage points after the reform. This decline is likely due to increased evasion, as suggested by the sharp responses in self-reported wealth but not in third-partyreported incomes. The wealth tax base becomes more elastic post reform, illustrating the key role of information policy choices for tax base elasticities.
Keywords: Wealth Tax; Wealth Reporting; Tax Avoidance; Tax Evasion; Bunching
JEL Codes: H23; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Annual wealth growth rate of treated taxpayers (H29) | Increased evasion (H26) |
| Increased evasion (H26) | Self-reported wealth adjustments (G51) |
| Self-reported wealth adjustments (G51) | Wealth tax base elasticity (H30) |
| Behavioral responses to the wealth tax (H31) | Underreporting of wealth (E21) |
| Wealth tax base elasticity (H30) | Cumulative revenue implications (H27) |
| Changes in information reporting requirements (H26) | Annual wealth growth rate of treated taxpayers (H29) |