Séminaires

EU Tax Observatory Lunch Seminar

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Prochainement

• Vendredi 19 avril 2024 12:00-13:00

  Salle R1-14

  JAKOB BROUNSTEIN (IFS) : Retaining your corporate income tax base: Effects of a tax haven shareholdership reform in Ecuador

  with Pierre Bachas and Alex Bajaña

  Résumé

  Can a country reduce its exposure to tax havens, and what are the consequences? We analyze the effects of the 2015 corporate tax surcharge applied by Ecuador to all domestic firms with shareholders from tax havens. This reform was made possible by the implementation of a mandatory ownership registry in 2012. We implement a difference-in-differences estimation that compares firms demonstrating pre-reform tax haven shareholdership versus other internationally owned firms (without tax haven presence). Exposed firms reduce their reported shareholder linkages to tax havens by 17pp on average, with approximately one-third of exposed firms ceasing observable ties to tax havens entirely. We document a nearly complete substitution (14pp) towards foreign non-haven ownership, hinting at a layering response. Yet, we also find a small increase in domestic shareholdership, and a modest rise in taxable profits and tax liability, which suggests that substituting to alternate avoidance strategies is not frictionless.

• Vendredi 26 avril 2024 13:30-14:30

  Salle R1.14

  WAMSER Georg (Tübingen University) : Effective Corporate Income Taxation and Corruption

  with Peter Egger, Sean Mc Auliffe and Valeria Merlo

  Résumé

  We show that effective corporate income taxes are lower in EU NUTS 2 regions where citizens perceive corruption to be comparatively more prevalent. We develop a new approach for calculating region-industry-year-specific empirical effective income tax rates (EEITRs) using firm-entity-level income statement data. Controlling for proxies for deductions that could legally be claimed (e.g., depreciation allowances, deduction of interest payments, potential for loss carryforwards, preferential treatment of patent revenues) and additional controls (e.g., regional GDP), as well as country-industry-year fixed effects, our benchmark model suggests that a one standard deviation increase in corruption leads to a statistically significant decrease in EEITRs of approximately 0.4 percentage points. From an economic point of view, this effect is sizeable given that the between-region within-country differences in corruption are significant. Our findings suggest more tax evasion in regions with high corruption via overstated tax-base deductions.

• Vendredi 3 mai 2024 12:00-13:00

  Salle R1-14

  STAGE Barbara (WHU) : *

• Vendredi 17 mai 2024 12:00-13:00

  Salle R1-14

  PARADISI Matteo (EIEF) : *

• Vendredi 31 mai 2024 12:00-13:00

  Salle R1-14

  TIAN Lin (INSEAD) : Leveraging Trading Networks to Improve Tax Compliance: Experimental Evidence from Uganda

  with Miguel Almunia, David Henning, Justine Knebelmann, and Dorothy Nakyambadde

• Vendredi 7 juin 2024 12:00-13:00

  Salle R2-01

  BROCKMEYER Anne (World Bank) : *

Archives

• Vendredi 5 avril 2024 12:00-13:00

  Salle R1-14

  MARTINEZ Isabel (KOF (ETH Zurich), CEPR, CESifo) : Earnings Responses to Sudden Wealth: Inheritance, Inter-Vivos Gifts, and Lotteries

  Résumé

  We study individual earnings responses to positive wealth shocks from inheritance, inter-vivos gifts, and lotteries. In a life-cycle model we show how responses may differ across the three types of shocks because they occur at different ages. In addition, gifts tend to be targeted, and socio-psychological circumstances differ between the different shocks. We explore these differences in a panel of tax records for a large Swiss canton. We find consistently negative earnings responses, irrespective of the source of the wealth shock. The strongest responses are found for older workers – partly through early retirement–, and for women. Conditional on age, inheritance triggers weaker earnings responses than lottery winnings. Gifts are associated with the strongest reductions in subsequent earnings. However, strong pre-trends confirm them to be targeted and do not allow us to quantify the causal effect of inter-vivos giving. For instrumented gifts, however, no statistically significant earnings response is observed. This suggests that, when abstracting from targeting, behavioral effects mitigate labor supply reductions of donees.

• Vendredi 29 mars 2024 12:00-13:00

  Salle R1-14

  HUGGER FELIX (OECD) : The Global Minimum Tax and the taxation of MNE profit

  CINTA GONZALEZ CABRAL Ana (OECD)

  with Massimo Bucci, Maria Gesualdo and Pierce O’Reilly

  Résumé

  The Global Minimum Tax (GMT) introduces significant changes to the international tax architecture and thereby to the taxation of large multinational enterprises. This paper assesses the impact of the GMT using new and unique data on MNE worldwide activity building on comprehensive estimates of global low-taxed profit. The paper has four main findings. First, the GMT reduces the incentives to shift profits, resulting in an estimated fall in global shifted profits by around half. Second, the GMT will reduce low-taxed profit worldwide through reduced profit shifting and top-up taxation. The global amount of MNE profit taxed below the 15% minimum effective rate is estimated to fall by more than two thirds. Third, the GMT is estimated to increase CIT revenues by USD 155-192 billion per year, or between 6.5-8.1% of current global CIT revenues. The distribution of these gains across jurisdictions strongly depends on the implementation choices of governments. Finally, the GMT is estimated to reduce tax rate differentials across jurisdictions. This could have potentially important impacts on the efficiency of the global allocation of investment and economic activity.

  Texte intégral [pdf]

• Vendredi 22 mars 2024 12:00-13:00

  Salle R1-14

  GARLANDA-LONGUEVILLE Lorenzo (University of Paris Nanterre, EconomiX-CNRS) : Why do banks have so many debts in tax havens?

  with Matthias Lé and Kevin Parra-Ramirez

  Résumé

  This paper examines the role of Offshore Financial Centers (OFCs), which account for more than 20% of the cross-border banking assets and liabilities in the international banking system. Examining the motivations behind banks' utilization of OFCs, the study focuses on whether tax considerations are a possible driving force. Through an comprehensive analysis of cross-border banking activities, we find a negative relationship between the distribution of intra-group liabilities -- representing over 50% of bank liabilities -- and corporate tax rates in both creditor and debtor countries, with a more pronounced pattern for debtor countries with higher tax rates. These results hold when distinguishing between parent companies and affiliates. Finally, we examine the regulatory arbitrage argument and find that the pattern exists even in situations of limited prudential arbitrage, shedding light on profit-shifting practices. This research contributes to the understanding of banks' global intermediation activities and tax avoidance within the financial sector.

• Vendredi 15 mars 2024 12:00-13:00

  Salle R1-14

  DAVIES Ron (University College Dublin) : Tax Haven Use and Employment Decisions: Evidence from Norway

  with Johannes Scheuerer

  Résumé

  While profit-shifting practices by multinational enterprises have received considerable attention in recent years for their impact on tax revenues, their real economic consequences remain poorly understood. In this paper, we use administrative data for the universe of Norwegian firms and workers to study employment responses to aggressive tax planning. We exploit variation in the timing of establishing corporate ownership presence in a tax haven to show that tax haven use is associated with lower employment growth. The granularity of the data allows us to uncover heterogeneity across worker groups, with the negative effects being strongest for service-sector employees in the highest occupations.In examining the potential of tax avoidance to shape labor market outcomes, this paper highlights the need for a more nuanced understanding of the socioeconomic implications of profit shifting beyond foregone government revenues.

• Vendredi 1er mars 2024 12:00-13:00

  Salle R1-14

  MARIE Olivier (Erasmus School of Economics) : Tax-Induced Emigration: Who Flees High Taxes? Evidence from the Netherlands

  with José Victor C. Giarola, Frank Cörvers and Hans Schmeets

  Résumé

  We study the impact of a policy change in the Netherlands that reduced preferential tax treatment duration for high-skilled migrants arriving from specific countries in certain years. Utilizing comprehensive tax and population data, we document substantial tax-induced emigration responses, primarily driven by the top 1% of earners. Highly mobile individuals within the top 5% also emigrate sooner, particularly to competing countries offering tax-breaks to attract skilled workers. Crucially, we uncover no change in mobility behavior among lower-earning workers. The increased tax receipts from lower-income individuals who remain offset the loss from fleeing high earners, making the policy fiscally cost-neutral.

  Texte intégral [pdf]

• Vendredi 16 février 2024 12:00-13:00

  Salle R1.14

  LE GUERN HERRY Ségal (Sciences Po) : Wealth Taxation and Portfolio Allocation

  Résumé

  The desirability of taxing household wealth has been at the forefront of global tax policy debates. A concern about wealth taxes is that they may discourage investment in productive capital, in contrast to property taxes focused on real estate. This paper investigates how wealth taxation affects households’ portfolio choices. Leveraging a major wealth tax reform introduced in 2017 that transformed the French wealth tax into a real estate tax, I estimate the degree of substitution between real estate and financial wealth. To identify causal effects, I use comprehensive administrative-linked income and wealth microdata for France and a difference-in-differences design comparing French residents to non-French residents subject to the wealth tax but not affected by the policy change. Five years after the reform, the stock of real estate held by French taxpayers decreased by an average of 6%, with little variation along the wealth distribution. This decrease in real estate is driven by investment rather than owner-occupied housing and is mirrored by a surge in dividend income, consistent with taxpayers reshuffling by selling some of their investment properties in order to invest in stocks. The reduced-form estimates can be converted into a cross-elasticity of 5: a 1 percentage point increase in the tax rate differential between real estate and financial assets leads to a 5% reallocation of households’ housing stock to financial capital. Overall, the response is relatively modest, which suggests that property taxes are a poor corrective tool to foster investment in financial assets.

  Texte intégral [pdf]

• Vendredi 9 février 2024 12:00-13:00

  Salle R1-14

  CZAJKA Léo (UCLouvain) : (JOB TALK) Fraud Detection Under Limited State Capacity: Experimental Evidence From Senegal

  with Bassirou Sarr and Mattea Stein

  Résumé

  Tax administrations in low-income countries face widespread tax evasion and high enforcement costs. They thus need information to detect where tax evasion is most severe, and allocate scarce resources accordingly. This paper shows that leveraging large firms’ trading network to collect information about their suppliers is a cost-efficient way to detect tax evasion and increase future audit returns. We collaborate with the Senegalese tax administration on a vast data collection effort to digitise lists of payments submitted by the largest firms and show that 88.6% of these firms provide incomplete information about their suppliers. This prevents any cross-checking against income declared by the suppliers themselves. We then randomise a low-cost communication campaign across all 3,487 misreporting firms, to discourage future misreporting. The intervention increases the prevalence of suppliers’ identification information by 52%. In aggregate, this allows to uncover $145.5 million in unreported revenue (i.e. 0.5 % of GDP). Most of it accrues to a few tax-registered suppliers, as opposed to informal ones. A simulation exercise shows that exploiting the newly available information to target the largest under-reporting suppliers would increase audit returns by at least 100%.

  Texte intégral [pdf]

• Vendredi 2 février 2024 12:00-13:00

  Salle R1.14

  NAVARRA Elisa (ECARES - Université libre de Bruxelles) : (JOB TALK) The Effects of Corporate Subsidies Along Supply Chains

  Résumé

  The increasing use of corporate subsidies by governments worldwide raises concerns about their trade effects. In this paper, I study the effects of corporate subsidies on exports, both direct (in subsidised industries) and indirect (in industries connected through input-output linkages). To this end, I use a unique dataset on all federal subsidies introduced by the United States since 2000. I document that, against multilateral trading rules, only a fraction of these subsidies are notified to the World Trade Organization. To identify causal effects, I exploit exogenous political shocks driven by changes in the identity swing states across electoral terms. I find that politically motivated subsidies foster exports in industries directly and indirectly exposed to them. Employment also increases. Contrary to the existing jurisprudence, the positive effects along supply chains stem from increased investments rather than price suppression. My analysis contributes to the ongoing debate about reforming multilateral trading rules on subsidies by advocating enhanced transparency and a broader interpretation of pass-through effects.

  Texte intégral [pdf]

• Vendredi 19 janvier 2024 12:00-13:00

  Salle R1.14

  MOREAU-KASTLER Ninon : (JOB TALK) No blood in my mobile: regulating foreign suppliers

  Résumé

  Can developed countries enforce that goods consumed domestically do not contribute to human and environmental rights violations in developing countries where they are sourced? This paper studies how global trade reacts to new due diligence policies, which constrain firms in developed countries to prevent human rights violations involvement of their foreign suppliers as much as possible. I study the US Dodd-Frank Act Conflict Mineral Rule (2010), a law targeting specific conflict minerals extracted in D.R.C. and adjoining countries. I study the consequences on source countries’ trade integration. Comparing targeted bilateral trade flows to non-targeted products and exporters within the structural gravity framework, I find that this policy decreased D.R.C. and adjoining countries’ exports in value of 3T products by 70%. However, this new type of extraterritorial law has unintended consequences: I estimate that 38% of exports are diverted to opaque countries, called legal havens after the law is implemented. Looking at US firms’ reactions, I show that sales are negatively affected, while administrative costs increase at the time of the law.

• Vendredi 1er décembre 2023 12:00-13:00

  Salle R1-14

  OLBERT Marcel (London Business School) : CANCELLED

  with John Gallemore, Jinhwan Kim and Iman Taghaddosinejad

  Résumé

  We construct a novel dataset to examine over fifty Russian oligarch companies’ global operations and equity investors in the period 2009-2021. We establish stylized facts and provide evidence on the efficacy of sanctions imposed after Russia’s aggression against the Ukraine in 2014 using difference-in-differences designs that compare sanctioned to nonsanctioned companies. First, the operational networks of oligarch companies are highly international and complex, with approximately 1,800 international subsidiaries and a disproportionate presence in tax haven countries. Second, oligarch companies increased the complexity of their organizational structures after the sanctions in 2014, in particular through tax haven entities. This effect is mitigated if tax haven countries have Country-by-Country Reporting information sharing agreements with sanctioning countries. Third, oligarch companies attract substantial equity capital from Western institutional investors. Fourth, while Western institutional investors have generally decreased their holdings in oligarch companies in recent years, sanctions imposed by the home countries ofWestern investors had no measurable impact on these investors’ holdings. Instead, Western investors increasingly hold oligarch companies’ equity through tax haven entities post-sanctions. Collectively, our findings suggest that the complex subsidiary network of oligarch companies and and their access to equity financing through tax havens allows oligarchs and their investors to conceal asset ownership and blunt the impact of global sanctions. Automatic information sharing between countries’ tax authorities can partially offset this effect.

• Vendredi 24 novembre 2023 12:00-13:00

  Salle R1-14

  WAMSER Georg (Tübingen University) : Effective Corporate Income Taxation and Corruption

  Résumé

  We show that effective corporate income taxes are lower in EU NUTS 2 regions where citizens perceive corruption to be comparatively more prevalent. We develop a new approach for calculating region-industry-year-specific empirical effective income tax rates (EEITRs) using firm-entity-level income statement data. Controlling for proxies for deductions that could legally be claimed (e.g., depreciation allowances, deduction of interest payments, potential for loss carryforwards, preferential treatment of patent revenues) and additional controls (e.g., regional GDP), as well as country-industry-year fixed effects, our benchmark model suggests that a one standard deviation increase in corruption leads to a statistically significant decrease in EEITRs of approximately 0.4 percentage points. From an economic point of view, this effect is sizeable given that the between-region within-country differences in corruption are significant. Our findings suggest more tax evasion in regions with high corruption via overstated tax-base deductions.

• Vendredi 10 novembre 2023 12:00-13:00

  Salle R1-14

  MOREAU-KASTLER Ninon : No blood in my mobile: regulating foreign suppliers

  Résumé

  Can developed countries ensure that domestically consumed goods do not contribute to human and environmental rights violations in the developing countries where they are sourced? This paper studies how global trade reacts to new due diligence policies, which constraint firms in developed countries to prevent human right violation involvement of their foreign suppliers as much as possible. I study US the Dodd-Frank Act Conflict Mineral Rule (2010), a law targeting specific conflict minerals extracted in D.R.C. and adjoining countries. I study the consequences on source countries trade integration. Comparing exports of targeted products from the targeted area, to non-targeted products and exporters within the structural gravity framework, I find that this policy decreased D.R.C. and adjoining countries exports value of 3T products by 70%. However, this new type of extraterritorial law has unintended consequences: I estimate that 38% of exports are diverted to opaque countries called legal havens after the law is implemented, in a counterfactual exercise. Turning to the effect on US firms, I find that sales are negatively affected, while production and administrative costs increase at the time of implementation.

• Vendredi 20 octobre 2023 12:00-13:00

  Salle R1-14

  ANDRÉ Loris (PSE) : ‘Do I get my money back?’: A Broader Approach to Inequality and Redistribution in France With a Monetary Valuation of Public Services

  with Jean-Marc Germain and Michaël Sicsic

  Résumé

  Who benefits from public transfers after paying taxes? This paper develops an extended approach of redistribution, allocating 100% of national income and transfers between various categories of households. We complete Piketty, Saez, Zucman (2018) with a new micro-founded methods to monetize and allocate in-kind transfers and collective public services in France. We find that 60% of households are net beneficiaries of extended redistribution. The impact of redistribution on attenuation of inequalities is two times larger than with the usual monetary approach, with a major role for health and education. An analysis over age groups highlights a “tragedy of horizons”: 90% of individuals over the age of 60 receive more than they pay, mainly via retirement pensions and health, versus less than 50% for those under the age of 60. Other types of analysis, such as family, gender, geographic area or social class, confirm the importance of the extended approach to properly assessing redistribution.

• Vendredi 6 octobre 2023 12:00-13:00

  Salle R1-14

  MIETHE Jakob (LMU) : Lost in Information: National Implementation of Global Tax Agreements

  with Annette Alstadsæter, Elisa Casi-Eberhard, and Barbara Stage

  Résumé

  We study how national implementation shapes the success of global tax agreements. In an unprecedented act of global coordination, countries have recently implemented a global multilateral network of automatic information exchange on financial account data, the Common Reporting Standard (CRS). Two parties, the sending, and the receiving countries need to be able to process information to make the CRS work. We build a novel database on local enforcement at the sending country level and on tax authority capacity at the receiving country level and study how they shape individual reactions to the CRS. Using micro-level data, we find a significant increase in bank transfers from tax havens to Norway from deposits owned through several layers of secrecy after the local introduction of the CRS, suggesting a possible legalization of previously unreported income and wealth abroad. Further analysis provide evidence that this takes place mainly through transfers from tax havens with a high level of local enforcement. Relying on macroeconomic data on cross-border bank deposits, we employ model averaging techniques to establish the most important characteristics of the receiving countries that make the CRS more effective. Our results suggest that receiving country information processing capabilities matter for the success of the CRS.

• Vendredi 22 septembre 2023 12:00-13:00

  Salle R1-14

  DUBININA Evgenyia (Charles University) : Online Cash Register Policy in Russia: Impact on Prices and Exit Decisions

  Résumé

  To achieve better tax compliance, the Russian government required small firms to use online cash registers (OCRs) for business-to-consumer transactions from 2017. For firms, the installation of the OCR leads to an increase in fixed costs and marginal markup that depends on production output. This might push firms to increase prices, to switch to the shadow market, to exit the market, or to combine the first two strategies. Using Regression Discontinuity Design technique, I estimate the effect of OCR policy on regional tax revenues. Using the Difference-in-Difference technique, I estimate the effects of the OCR policy on business activity changes and firms' exit decisions. Exogenous variation for causal inference is possible thanks to different years of policy implementation (2017, 2018). The research findings may be useful to help policymakers address the question of firms' behavior after the OCR policy implementation.

• Vendredi 15 septembre 2023 12:00-13:00

  Salle R1-14

  PAPPADÀ Francesco (PSE) : Rethinking the Informal Economy and the Hugo Effect

  Kenneth Rogoff

  Résumé

  This paper offers a new approach to measuring the size of the informal economy based on VAT data for the European Union. Although data intensive, our EVADE measure is simpler and more transparent than existing measures. EVADE also shows more variation across countries of Europe than earlier measures, including significantly higher informality in Greece, Italy and Spain, for example. Moreover, we find considerably higher variation within countries across time; in a cross-country time series regression, controlling for tax rates, we con- firm that the informal economy grows significantly in recessions and decreases in booms, which we term the “Hugo effect”.

• Vendredi 9 juin 2023 12:00-13:00

  Salle R1.15

  BACH Maria (Lausanne) : Do billionaires pay taxes ?

  with Laurent Bach, Antoine Bozio and Arthur Guillouzic

• Jeudi 25 mai 2023 11:00-12:00

  Salle R1.09

  RIEDEL Nadine (University of Münster) : What Happens when you Tax the Rich? – Evidence from South Africa

  with Christopher Axelson, Antonia Hohmann, Jukka Pirttilä, Roxanne Raabe

  Résumé

  In 2017, South Africa increased its top personal income tax (PIT) rate in an attempt to enhance tax revenue collection and reduce after-tax income inequality. Drawing on the population of personal income tax returns and a transparent empirical identification design, we show that treated taxpayers strongly lowered their reported taxable income in response to the tax reform, translating into an elasticity of taxable income of around 1. The size of the response is particularly pronounced at the very top of the income distribution and among the self-employed. We reject a significant increase in PIT tax revenue collection. The impact of the reform on after-tax income inequality hinges on whether observed income adjustments reflect real or reporting responses. Preliminary analyses show no response in treated taxpayers’ labor supply and job effort.

• Vendredi 12 mai 2023 12:00-13:00

  Salle R1.13

  VICARD Vincent (CEPII) : The instruments of profit shifting

  Kévin Parra-Ramirez

  Résumé

  The relevance of tax avoidance at the global level has been convincingly documented by the recent literature. How firms avoid tax - the quantitative relevance of different instruments of profit shifting - is however still unclear. Several papers have provided direct evidence and quantification for the use of different instruments of profit shifting separately and for different countries, providing conflicting conclusions. In this paper we use firm level data to assess the quantitative importance of the three main instruments of profit shifting by multinationals -- the manipulation of transfer prices in trade in goods, the location of intangibles and export of services from tax havens and the strategic location of intra-group debt -- for a single high tax country, France. We further compare these estimates based on direct evidence to estimates of the amount of missing profits in France based on the location of multinationals' profits (FDI income), to get a complete picture of the impact of profit shifting through the lens of balance of payments data.

• Vendredi 28 avril 2023 12:00-13:00

  Salle R1.13

  BASELGIA Enea ( University of St. Gallen) : The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty

  Résumé

  This paper studies the effectiveness of the Automatic Exchange of Information (AEOI) in fighting tax evasion. AEOI via the Common Reporting Standard (CRS) is an international agreement that enables the yearly exchange of information between countries without having to request it, thereby improving tax transparency. Exploiting quasi-random policy variation, administrative wealth tax returns, and granular amnesty data for Switzerland, I find: (i) 69% of the total 156k participants were pushed into the Swiss amnesty by the AEOI. (ii) Out of 66.4 billion Swiss francs (or 10% of GDP) of hidden assets uncovered, 53% are attributable to the AEOI. (iii) The effects on tax compliance appear significant and long-lasting. On average, reported taxable wealth rises by about 60% after a voluntary self-disclosure and remains at this level in subsequent years. Moreover, using micro-level amnesty data, I show that tax evasion is likely more widespread and more evenly distributed in Switzerland relative to other European countries—which is consistent with Switzerland’s lack of third- party reporting prior to the AEOI in 2017.

• Vendredi 21 avril 2023 12:00-13:00

  Salle R1.13

  KATORPI Kaisa (Tampere University, VATT) : The effects of tax audits on business activity

  Jarkko Harju, Tuomas Matikka, Annika Nivala

  Résumé

  We analyze firm responses to risk-based tax audits using full firm population data on operational tax audits and firm tax returns in Finland. This provides important evidence for policy, as risk-based audits are a central tool in tax enforcement. We use matching to account for observable differences in selection into being audited, and show that the matched firms have similar trends in key outcomes prior to the audit. We find that there is an immediate and persistent increase in reported profits by the audited firms after getting audited, which is an indication of significant non-compliance in the baseline. Regarding the mechanisms of non-compliance, we find that both reported revenue and costs increase after audit. We also observe a real effect of tax enforcement on economic activity: there is an increase in the likelihood of filing bankruptcy after audit, especially for firms that were found to be non-compliant.

• Vendredi 24 mars 2023 12:00-13:00

  Salle R1.13

  LAFFITTE Sébastien (ECARES ULB) : The Market for tax havens

  Résumé

  I investigate the determinants of the development of tax havens using a novel database that tracks the building of offshore institutions in 48 tax havens. By tracking offshore regulations in tax havens, this is the first database to identify when tax havens became so. After describing the development of tax havens in the 20th century and several key empirical patterns, I explore their causal determinants. Building on a theoretical framework and on the idea that tax havens are the suppliers in the market for offshore services, I explore two types of market shocks. First, I show that demand shocks, identified through changes in tax rates in neighboring countries, explain why countries become tax havens. Second, I find that competition shocks, identified through changes in the number of tax havens in neighboring countries, explain why tax havens update their regulations. This reaction is facilitated by the diffusion of legal technologies between tax havens. Finally, I show that becoming a tax haven generates GDP per capita gains for countries adopting this status. My results suggest that high-tax countries’ policymakers should anticipate the responses of tax havens to international tax reforms by making their potential legal innovations costly.

  Texte intégral [pdf]

• Vendredi 10 mars 2023 12:00-13:00

  Salle R2.01

  TORTAROLO Dario (University of Nottingham) : Revealing 21% of GDP in Hidden Assets: Evidence from Argentina's Tax Amnesties

  work with Juliana Londoño-Vélez

  Résumé

  The paper studies the effectiveness of tax amnesties and their impacts on capital taxation and public spending. We leverage rich policy variation from Argentina, which implemented the world’s most successful program, reportedly revealing assets worth 21% of GDP. First, despite substantial offshore tax evasion, declared foreign assets quadrupled. Second, tax progressivity improved because disclosures were extensive among the wealthiest 0.1%. Third, improving tax compliance has sizable fiscal externalities on capital taxes and social transfers: the wealth and capital income tax bases more than doubled, and the earmarked revenue boosted pension benefits by 15%. We end by discussing the lessons from Argentina.

  Texte intégral [pdf]

• Vendredi 24 février 2023 12:00-13:00

  Salle R1.13

  DI CARO Paolo (Italian Ministry of Economy and Finance, University of Rome La Sapienza) : One step forward and three steps back: pros and cons of a flat tax reform

  with Francesco Figari, Carlo Fiorio, Marco Manzo, Andrea Riganti

  Résumé

  We use a rich administrative dataset on individual tax returns from 2008 to 2015 to analyse the behavioural and distributive effects of a flat tax (FT) reform introduced in 2011 for residential property income in Italy replacing the progressive personal income tax. Linking a panel of individual tax data with cadastral property records, and using a difference-in-difference identification strategy, we address five research questions: (i) does the FT increase the probability of declaring a positive rental income to the tax authorities? (ii) does the FT increase the declared tax base? (iii) is the reduced tax burden shared with the tenant? (iv) does the FT affect the overall tax revenue? (v) who are the gainers of the policy? The estimated intention-to-treat effects suggest that the decrease of tax evasion is limited whereas tax burden reduction is large, it is not shared with tenants and it mostly benefits top-income taxpayers. Overall, top 1% of property owners reap about 20% of the overall lost tax revenues.

  Texte intégral [pdf]

• Vendredi 10 février 2023 12:00-13:00

  Salle R1.13

  WIER Ludvig (Danish Ministry of Finance) : Global Profit Shifting, 1975-2019

  with Gabriel Zucman

  Résumé

  This paper constructs time series of global profit shifting covering the 2015–19 period, during which major international efforts were implemented to curb profit shifting. We find that (i) multinational profits grew faster than global profits, (ii) the share of multinational profits booked in tax havens remained constant at around 37 per cent, and (iii) the fraction of global corporate tax revenue lost due to profit shifting rose from 9 to 10 per cent. We extend our time series back to 1975 and document a remarkable increase of multinational profits and global profit shifting from 1975 to 2019.

  Texte intégral [pdf]

• Vendredi 27 janvier 2023 12:00-13:00

  Salle R1.13

  BOAS Hjalte (University of Copenhagen and the Danish Ministry of Taxation) : Taxing Wealth in a Globalized World: The Compliance Effect of Automatic Information Exchange

  with Niels Johannesen, Claus Thustrup Kreiner, Lauge Larsen, and Gabriel Zucman

  Résumé

  Leaks from offshore financial institutions have revealed significant wealth of the rich hidden away from tax authorities worldwide. To address this adverse effect of globalization, more than 100 countries recently adopted a new policy instrument that provides automatic information exchange on financial accounts. Under the new Common Reporting Standard (CRS), banks are required to identify owners of financial accounts and provide information about their assets and capital income to their home countries. Despite its immediate policy relevance, little is known about the effectiveness of such policies to improve tax compliance and uncover hidden wealth. Using several data sources inside the Danish tax authorities and customized tax audits, we study the three ways in which the new policy of automatic information exchange can improve tax compliance. Tax evaders may repatriate their undeclared offshore wealth before the onset of automatic information exchange, they may start to self-report this wealth and its return to the tax authorities, or the tax authorities may detect their evasion in audits that use the new information reports. We document compliance effects of taxpayers along all margins.

• Vendredi 13 janvier 2023 12:00-13:00

  Salle R1.13

  MANDEL Antoine (Paris 1) : The network structure of global tax evasion evidence from the Panama papers

  with Fernando Garcia Alvarado

  Résumé

  This paper builds on recent insights from network theory and on the rich dataset made available by the Panama Papers in order to investigate the micro-economic dynamics of tax-evasion. We model offshore financial entities documented in the Panama Papers as links between jurisdictions in the global network of tax evasion. A quantitative analysis shows that the resulting network, far from being a random collection of bilateral links, has key features of complex networks such as a core-periphery structure and a fat-tail degree distribution. We argue that these structural features imply that policy must adopt a systemic perspective to mitigate tax evasion. We offer three sets of insights from this perspective. First, we identify through centrality measures tax havens that ought to be priority policy targets. Second, we show that efficient tax treaties must contain exchange information clauses and link tax-havens to non-haven jurisdictions. Third, we show that the optimal deterrence strategies for a social-planner facing a strategic tax-evader in a Stackelberg competition can be characterized using the notion of Bonacich centrality.

  Texte intégral [pdf]

• Vendredi 16 décembre 2022 13:00-14:00

  Salle R1.13, Campus Jourdan

  PARENTI Mathieu (PSE & INRAE) : Multinational Enterprises and International Tax Shifting: Evidence from Shutting Down the Mauritius Route to India

  joint with Josh De Lyon (Oxford & OECD) and Swati Dhingra (London School of Economics, CEP, & CEPR)

  Résumé

  Multinational enterprises exploit gaps in international taxation rules to artificially shift their tax liability to low-tax countries. Huge empirical challenges arise in understanding international tax loopholes due to limited coverage of tax haven countries in available data sources and even more limited experience of plugging tax loopholes internationally. This paper contributes to both these areas by examining foreign investments and international tax loopholes through new administrative transaction data from India. Gravity models of Foreign Direct Investment (FDI) inflows to India show a stark outlier - Mauritius - with which India has a bilateral tax treaty that contained a loophole allowing both Indian and foreign firms to avoid capital gains tax on profits of company sales. In 2016, India and Mauritius agreed to reform treaty, removing the loophole. and changing effective tax rates to investments in India through Mauritius. Following the reform, we show that the volume of FDI flowing to India through Mauritius falls, compared to FDI from other routing countries. Firm-level micro data confirms the finding that foreign investors reduced their investments through Mauritius, with some diversion to investments from other tax haven channels. Indian firms who had received FDI through Mauritius before the policy change did not experience a relative fall in total FDI inflows. Plugging international tax loopholes therefore reduced tax avoidance possibilities without sacrificing much the potential to attract foreign investment.

• Vendredi 2 décembre 2022 13:00-14:00

  Salle R1.14, Campus Jourdan

  DELATTE Anne Laure (CNRS, University Paris Dauphine) : CANCELLED: Banks Defy Gravity in Tax Havens

  Vincent Bouvatier and Gunther Capelle-Blancard

  Résumé

  Using country-by-country reports from the Systemically Important Banks in the European Union, we measure “abnormal” banking activity in tax havens (TH). Our assessment is based on a gravity model used to predict the expected international turnover of EU banks worldwide. We find that: 1) banks turnover in TH represents on average twice the gravity predictions; 2) there is a large heterogeneity across TH with Hong Kong, Luxembourg and Singapore concentrating the bulk of the abnormal turnover; 3) the abnormal turnover of EU banks represents 1.46% of GDP in TH and varies between 16% of GDP and zero; 4) we observe a decline and a concentration of abnormal turnover since the reporting requirement has been introduced in the EU.

• Vendredi 18 novembre 2022 13:00-14:00

  Salles R1.14, Campus Jourdan

  PALANSKÝ Miroslav (Charles University, Prague) : The spillover effects of forced corporate transparency through offshore leaks

  Résumé

  Leaks of confidential documents from companies that facilitate the creation of secretive corporate structures in offshore jurisdictions have become a major source of information about the world of financial secrecy, with far-reaching consequences for the individuals involved. In this paper, I look at the effects that the leaks have on individuals not directly involved in the leaks, but using schemes and tax havens exposed by the leaks. I develop a new dataset of bilateral corporate transparency and use the leaks in an event-study design to assess their impact on cross-border bank deposits and portfolio investment. I find that offshore leaks negatively influence the use of the implicated offshore jurisdictions: the more pronounced is the presence of a given offshore jurisdiction in an offshore leak, the higher is the effect on inward cross-border financial flows to that jurisdiction. I then investigate whether this effect is driven by one important feature of the data on cross-border financial flows: that it is reported at the immediate ownership level (rather than ultimate). I find a higher negative effect of leaks on financial flows from less-developed countries, in which control mechanisms are weaker, and thereby the costs of setting up a simple offshore structure are lower (via lower detection probabilities).

• Mercredi 9 novembre 2022 12:00-13:00

  PSE, Campus Jourdan, R1.13.

  LOPEZ-FORERO Margarita (Université d’Evry, Paris-Saclay) : Aggregate Labor Share and Tax Havens: Things are not always what they seem

  Résumé

  We use French firm-level data to study the role of multinational enterprises' (MNEs) presence in tax havens in determining the dynamics of the aggregate labor share and therefore, income inequalities between workers and capitalists. Given these firms’ weight in the economy, we find that tax haven presence of MNEs accounts for a 5% of the observed increase in the aggregate share of labor in France between 1997-2014. Implementing a difference-in-differences we analyze the effect firm entry in a tax haven on firms' labor share of value added and each of its components. We find that average firm labor share in France experiences an increase by 2.2% over the immediate years following the establishment in a tax haven. We argue that the labor share of MNEs with presence in tax havens is overestimated given that tax optimization partly consists in artificially shifting profits to low tax jurisdictions, thus underestimating domestic value added, which experiences an average drop by 11.1%. Indeed, the labor share increases even if its numerator, total wage bill, decreases on average by 8.8% when MNEs enter a tax haven. Additionally, the total wage bill drop is explained by a strong decline in employment (-8.6%) rather than a decline on average firm wages, on which there is no statistically significant effect. This means that the effect of firms' usage of tax havens on workers goes beyond the underestimation of their share of income. Finally, we implement a panel event study design to show that our estimates capture the tax haven entry effect and not differential trends between treated and control units.

• Mercredi 19 octobre 2022 12:00-13:00

  Salle R1.13, Campus Jourdan

  PAPPADÀ Francesco (PSE) : The dynamics of fiscal policy and informal economy under sovereign risk

  Yanos Zylberberg

  Résumé

  In economies with imperfect tax enforcement, the dynamics of the informal economy might mitigate the relationship between fiscal policy and default risk. We build a model of sovereign debt with limited commitment and imperfect tax enforcement to assess the consequences of dynamic distortions induced by fiscal policy. In the model, fiscal policy persistently affects taxable activity, which impacts future fiscal revenues and thus default risk. The interaction of tax distortions and limited commitment strongly constrains the dynamics of optimal fiscal policy and leads to costly fluctuations in consumption.

• Mercredi 5 octobre 2022 12:00-13:00

  Salle R 1.13, Campus Jourdan

  CASI-EBERHARD Elisa (Norwegian School of Economics) : So close and yet so far: The ability of mandatory disclosure rules to crack down on offshore tax evasion

  Mohammed Mardan and Rohit R. Muddasani

  Résumé

  We study the short-term effect of the introduction of the mandatory disclosure program for aggressive tax arrangements by focusing on the one introduced in May 2018 under the Council Directive 2018/288/EU (or DAC6). Employing bilateral data on cross-border deposits, we study the effect of this new disclosure requirement on cross-border tax evasion. Our results show a reduction of cross-border deposits in EU countries with a strong enforcement, captured by large monetary penalties for misreporting. At the same time, we document a relocation of income and wealth to countries with limited intermediary reporting obligation. Finally, we detect an increase in the volume of cross-border deposits from countries offering citizenship/residence by investment programs, suggesting the use of these schemes as regulatory arbitrage to circumvent the disclosure mandated under DAC6. We provide timely and relevant evidence contributing to the debate on international administrative cooperation to reduce cross-border tax evasion.

• Vendredi 9 septembre 2022 12:00-13:00

  Salle R 1.13, Campus Jourdan

  NICOLAIDES Panayiotis (EU Tax Observatory, Hertie School Berlin) : Electronic Payments Lottery and Tax Revenue: Evidence from a Natural Experiment in Greece

  Résumé

  This paper studies a third-party reporting policy - the Greek electronic payments lottery - which incentivises the use of electronic payments over cash to fight tax evasion. The lottery allocates tickets automatically to the entire population of consumers, proportional to their electronic payments, and offers €1 million in prizes split to 1,000 winners every month. Taking advantage of a delayed introduction, 10 monthly draws with 10,000 winners and €10 million in prizes took place retroactively in Christmas 2017. Participation was unanticipated and tickets corresponded to electronic payments completed in previous months. To identify the effect on VAT revenue, I combine information from the universe of winners, a random sample of 50,000 non-winners and monthly VAT revenue from regional tax offices. I estimate (a) every additional winner randomly allocated to a tax office’s jurisdiction, leads to an overall increase of 0.01% in VAT revenue (b) winners initially increase their electronic consumption by 15% after winning, then decrease it to pre-winning levels after 5 months (c) in regions with large number of winners, there is evidence of spillover effects in the electronic consumption of non-winning individuals. While the policy does not change payment habits permanently, the overall revenue effect is fiscally positive.

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  Salle R1.13

  KATORPI Kaisa (Tampere University, VATT) : *