nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2021‒02‒22
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. "Paraísos fiscales", wealth taxation, and mobility By David R. Agrawal; Dirk Foremny; Clara Martínez-Toledano
  2. A Wealth Tax for South Africa By Aroop Chatterjee; Léo Czajka; Amory Gethin
  3. The Response of Taxpayer Compliance to the Large Shock of Italian Unification By Antonio Acconcia; Marcello d'Amato; Riccardo Martina; Marisa Ratto
  4. Determinantes departamentales y estimación del riesgo distrital del trabajo informal en el Perú By Tomaselli, Andrés

  1. By: David R. Agrawal (University of Kentucky, Martin School of Public Policy & CESifo); Dirk Foremny (Universitat de Barcelona & IEB & CESifo); Clara Martínez-Toledano (Columbia Business School)
    Abstract: This paper analyzes the effect of wealth taxation on mobility and the consequences for tax revenue and wealth inequality. We exploit the unique decentralization of the Spanish wealth tax system in 2011—after which all regions levied positive tax rates except for Madrid—using linked administrative wealth and income tax records. We find that five years after the reform, the stock of wealthy individuals in the region of Madrid increases by 10% relative to other regions, while smaller tax differentials between other regions do not matter for mobility. We rationalize our findings with a theoretical model of evasion and migration, which suggests that evasion is the mechanism most consistent with all of the mobility response being driven by the paraíso fiscal. Combining new subnational wealth inequality series with our estimated elasticities, we show that Madrid’s status as a tax haven reduces the effectiveness of raising tax revenue and exacerbates regional wealth inequalities.
    Keywords: Wealth Taxes, Mobility, Inequality, Enforcement, Fiscal Decentralization, Tax Havens, Evasion
    JEL: E21 H24 H31 H73 J61 R23
    Date: 2020
  2. By: Aroop Chatterjee (WITS - University of the Witwatersrand [Johannesburg]); Léo Czajka (UCL - Université Catholique de Louvain); Amory Gethin (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - 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, WIL - World Inequality Lab)
    Abstract: This paper considers the feasibility of implementing a progressive wealth tax to collect additional government revenue to both reinforce fiscal sustainability in the wake of the COVID-19 crisis and reduce persistent extreme inequality in South Africa. Drawing on our new companion paper, we first identify the tax base and discuss the design of potential tax schedules. Testing alternative tax schedules, we estimate how much additional revenue could be collected from a progressive tax on the top 1% richest South Africans. Our results show that under conservative assumptions, a wealth tax could raise between 70 and 160 billion Rands—1.5% to 3.5% of the South African GDP.We discuss in turn how sensitive our estimates are to assumptions on (1) mismeasurement of wealth and (2) tax avoidance and evasion, based on the most recent tax policy literature. We examine technical issues related to the enforcement of the tax, and how third-party reporting and pre-filled declarations could be used to optimize measurement of taxable wealth and minimize evasion and avoidance opportunities. Finally, we explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth.
    Date: 2021–01
  3. By: Antonio Acconcia (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Marcello d'Amato (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Riccardo Martina (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Marisa Ratto (LEDa - Laboratoire d'Economie de Dauphine - CNRS - Centre National de la Recherche Scientifique - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres)
    Abstract: The unification of Italy in 1861 determined that all institutions of the pre-unitary states were replaced by those of the new-born Kingdom of Italy, thus implying common rules for agents formerly obeying to different ones. Moreover, a major tax reform was also set in that determined differential increments of the tax burden across provinces. We investigate the potential implications of these events for tax compliance. By comparing a province-level measure of tax evasion just after the reform with a corresponding recent one, we show a strong process of convergence in compliance. Non-negligible spatial differences in tax evasion, however, still persist nowadays. Further empirical evidence suggests that such differences can be at least in part traced back to the tax reform.
    Keywords: tax shock,noncompliance,State formation,decentralized enforcement
    Date: 2021–02–05
  4. By: Tomaselli, Andrés
    Abstract: El Perú presenta unos niveles de informalidad laboral elevados incluso en el contexto latinoamericano. Diferentes estudios han constatado que la tasa de informalidad supera en unos 20 puntos porcentuales lo que le correspondería al país dado su PIB per cápita. Según cifras de la Encuesta Nacional de Hogares (ENAHO), en 2019 casi tres de cada cuatro trabajadores peruanos se encontraban en condición de informalidad, situación que se agrava en varios departamentos, donde las cifras alcanzan en torno a nueve de cada diez trabajadores. Aun así, en un contexto de altos niveles de crecimiento económico, entre los años 2007 y 2015 el país registró una reducción importante de su tasa de informalidad laboral. A partir de 2016, ya con un crecimiento económico más restringido, esta tasa ha tendido a estabilizarse. La pandemia de la enfermedad por coronavirus (COVID-19) supone el riesgo de retroceder en los logros obtenidos. En un contexto de pérdidas de millones de empleos, el tránsito hacia la informalidad será inevitable para muchas personas. De ahí la importancia de identificar a los territorios con mayor riesgo de informalidad laboral y los determinantes geográficamente diferenciados de dicha informalidad. De este modo, se contará con una herramienta que permitirá orientar y focalizar la política pública de la mejor manera.
    Date: 2021–02–12

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