Working Paper: NBER ID: w31333
Authors: Bertrand Garbinti; Jonathan Goupille-Lebret; Mathilde Muoz; 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-party-reported 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; Tax Evasion; Information Reporting; Elasticity
JEL Codes: H26; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reduced reporting requirements (G38) | increased tax evasion (H26) |
| wealth tax reform (H24) | decline in annual wealth growth rate of treated taxpayers (H24) |
| wealth tax reform (H24) | wealth tax base becomes more elastic (H31) |
| misreporting and evasion (H26) | persistent underreporting of wealth (E21) |
| wealth tax reform (H24) | growing revenue losses for the tax authority (H26) |
| behavioral responses to reform (D91) | decline in reported wealth growth (E21) |
| bunching below simplification threshold (C60) | crossing threshold after positive shocks (C24) |