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Tax evasion and tax avoidance

Author

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  • Alstadsæter, Annette
  • Johannesen, Niels
  • Le Guern Herry, Ségal
  • Zucman, Gabriel

Abstract

Exploiting rich administrative data and salient policy variation, we study the substitution between illegal tax evasion and legal tax avoidance. By increasing its enforcement effort, the Norwegian government pushed many wealthy individuals to disclose assets previously hidden abroad. We find that the taxes paid by these individuals rise 30% at the time of disclosure and that the rise is sustained over time. After stopping to evade, taxpayers do not start avoiding more. Our results suggest that cracking down on evasion by the wealthy can be an effective way to raise tax revenue, increase tax progressivity, and ultimately reduce inequality.

Suggested Citation

  • Alstadsæter, Annette & Johannesen, Niels & Le Guern Herry, Ségal & Zucman, Gabriel, 2022. "Tax evasion and tax avoidance," Journal of Public Economics, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:pubeco:v:206:y:2022:i:c:s0047272721002231
    DOI: 10.1016/j.jpubeco.2021.104587
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    Cited by:

    1. Agneša Víghová, 2022. "Detection of tax evasion using tax audits in the Slovak Republic," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(1), pages 214-225, September.
    2. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," SciencePo Working papers Main hal-03811306, HAL.
    3. Enea Baselgia & Isabel Z. Martínez, 2022. "Behavioral Responses to Special Tax Regimes for the Super-Rich: Insights from Swiss Rich Lists," CESifo Working Paper Series 9778, CESifo.
    4. Leenders, Wouter & Lejour, Arjan & Rabaté, Simon & van ’t Riet, Maarten, 2023. "Offshore tax evasion and wealth inequality: Evidence from a tax amnesty in the Netherlands," Journal of Public Economics, Elsevier, vol. 217(C).
    5. Enea Baselgia & Isabel Z. Martinez, 2022. "Tracking and Taxing the Super-Rich: Insights from Swiss Rich Lists," KOF Working papers 22-501, KOF Swiss Economic Institute, ETH Zurich.
    6. Lompo, Miaba Louise & Ouoba, Marie Madeleine, 2022. "How they hide money? An investigation on tax evasion of large corporations and wealthy taxpayers," MPRA Paper 113410, University Library of Munich, Germany.
    7. Trung Kien Tran & Minh Tuan Truong & Kim Tu Bui & Phung Duc Duong & Minh Vuong Huynh & Tran Thai Ha Nguyen, 2023. "Firm Risk and Tax Avoidance in Vietnam: Do Good Board Characteristics Interfere Effectively?," Risks, MDPI, vol. 11(2), pages 1-17, February.
    8. Rubolino, Enrico, 2023. "Does weak enforcement deter tax progressivity?," Journal of Public Economics, Elsevier, vol. 219(C).
    9. Dieter Pfaff & Patricia Ruffing-Straube & David Staubli, 2022. "Entwicklung der straflosen Selbstanzeigen im Zuge der Einführung des automatischen Informationsaustauschs in der Schweiz," Working Papers 394, University of Zurich, Department of Business Administration (IBW).
    10. Wladislaw Mill & Cornelius Schneider, 2023. "The Bright Side of Tax Evasion," CESifo Working Paper Series 10615, CESifo.
    11. Lompo, Miaba Louise & Ouoba, Marie Madeleine, 2022. "How they hide money? An investigation on tax evasion of large corporations and wealthy taxpayers," MPRA Paper 114235, University Library of Munich, Germany.
    12. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," Working Papers hal-03811306, HAL.
    13. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," SciencePo Working papers hal-03811306, HAL.

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