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on Public Finance |
| By: | John Guyton; Patrick Langetieg; Daniel Reck; Max Risch; Gabriel Zucman |
| Abstract: | This paper studies tax evasion at the top of the U.S. income distribution using IRS micro-data from (i) random audits, (ii) targeted enforcement activities, and (iii) operational audits. Drawing on this unique combination of data, we demonstrate empirically that random audits underestimate tax evasion at the top of the income distribution. Specifically, random audits do not capture most tax evasion through offshore accounts and pass-through businesses, both of which are quantitatively important at the top. We provide a theoretical explanation for this phenomenon, and we construct new estimates of the size and distribution of tax noncompliance in the United States. In our model, individuals can adopt a technology that would better conceal evasion at some fixed cost. Risk preferences and relatively high audit rates at the top drive the adoption of such sophisticated evasion technologies by high-income individuals. Consequently, random audits, which do not detect most sophisticated evasion, underestimate top tax evasion. After correcting for this bias, we find that unreported income as a fraction of true income rises from 7% in the bottom 50% to more than 20% in the top 1%, of which 6 percentage points correspond to undetected sophisticated evasion. Accounting for tax evasion increases the top 1% fiscal income share significantly. |
| JEL: | D31 H26 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28542&r=all |
| By: | Maximilian Todtenhaupt; Johannes Voget |
| Abstract: | We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation. |
| Keywords: | M&A, productivity, international taxation |
| JEL: | F23 H25 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8967&r=all |
| By: | David E. Wildasin |
| Abstract: | Many important questions in the field of public finance can be viewed as problems involving public policies in open economies. This paper draws together, from that perspective, a wide range of topics in public economics, emphasizing the implications of resource mobility for our understanding of the efficiency and distributional impacts of public policies. These topics are relevant for the purposes of policy evaluation, political economy, and the broadest questions of governance and of public sector organization at all levels of government, from the purely local to the global. |
| Keywords: | tax incidence, redistribution, social insurance, subnational governments, international, fiscal competition, urban |
| JEL: | H00 R00 F20 F60 J20 J60 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8953&r=all |