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Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax

Author

Listed:
  • Bertrand Garbinti

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research)

  • Jonathan Goupille-Lebret

    (ENS de Lyon - École normale supérieure de Lyon, CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research, CESifo - CESifo)

  • Mathilde Munoz

    (UC Berkeley - University of California [Berkeley] - UC - University of California, CEPR - Center for Economic Policy Research, NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research)

  • Stefanie Stantcheva

    (Harvard University, CEPR - Center for Economic Policy Research, NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research)

  • Gabriel Zucman

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UC Berkeley - University of California [Berkeley] - UC - University of California, CEPR - Center for Economic Policy Research, NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research)

Abstract

Using exhaustive administrative wealth and income tax data, we study a French wealth tax reform that scaled back information reporting requirements below a certain wealth threshold. We develop a dynamic bunching approach that permits estimating the average response to the reform, the share of compliers, and the LATE. Reported wealth declines sharply in response to the reform and annual wealth growth rates are on average 20% lower among affected taxpayers. This decline appears due to increased evasion facilitated by the lower reporting requirements, as suggested by the fall in self-reported wealth but the lack of response in third-party-reported labor and capital incomes. By contrast, the elasticities to tax rates estimated are very small and insignificant. This illustrates the critical role of information reporting policies in shaping taxpayers' behavior.

Suggested Citation

  • Bertrand Garbinti & Jonathan Goupille-Lebret & Mathilde Munoz & Stefanie Stantcheva & Gabriel Zucman, 2024. "Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax," Working Papers halshs-04753434, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04753434
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04753434v1
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    More about this item

    Keywords

    H23 H26 WEALTH TAX WEALTH REPORTING TAX AVOIDANCE TAX EVASION BUNCHING; Wealth Tax; Wealth; Reporting; Tax Avoidance; Tax Evasion; Bunching;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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