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  3. American Economic Review
  4. June 2019
  5. Tax Evasion and Inequality

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Tax Evasion and Inequality

  • Annette Alstadsæter
  • Niels Johannesen
  • Gabriel Zucman
American Economic Review
vol. 109, no. 6, June 2019
(pp. 2073–2103)
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Abstract

Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01 percent richest households evade about 25 percent of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5 percent throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality.

Citation

Alstadsæter, Annette, Niels Johannesen, and Gabriel Zucman. 2019. "Tax Evasion and Inequality." American Economic Review, 109 (6): 2073–2103. DOI: 10.1257/aer.20172043

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • H26 Tax Evasion and Avoidance
  • K34 Tax Law