“Tax Evasion and Tax Avoidance” (with Annette Alstadsaeter, Niels Johannesen and Gabriel Zucman), Journal of Public Economics (2022)
Exploiting rich administrative data and salient policy variation, we study the substitution between illegal tax evasion and legal tax avoidance. By increasing its enforcement effort, the Norwegian government pushed many wealthy individuals to disclose assets pre- viously hidden abroad. We find that the taxes paid by these individuals rise 30% at the time of disclosure and that the rise is sustained over time. After stopping to evade, taxpayers do not start avoiding more. Our results suggest that cracking down on evasion by the wealthy can be an effective way to raise tax revenue, increase tax progressivity, and ultimately reduce inequality.
“Wealth Taxation and Portfolio Allocation” [Updated May 2025]
Should governements tax different assets at different rates? The answer depends crucially on the cross-elasticities between asset classes, of which few estimates exist. This paper estimates the cross-elasticity between the two main components of household wealth: financial and real estate assets. In 2017, France transformed its wealth tax into a real estate tax, thereby eliminating wealth taxation on financial assets. Using comprehensive linked administrative income and wealth data from France, I study the effect of this unique reform by contrasting the responses of French residents to non-residents, who remained subject to the wealth tax but were unaffected by the reform. Five years after the reform, French taxpayers have reallocated on average 5% of their real estate holdings toward financial assets. These responses translate into a quite modest cross-elasticity: a one percentage point differential increase in the tax rate on real estate causes taxpayers to reallocate 4.7% of their real estate assets to financial assets. This reallocation is driven by reduced ownership in investment properties rather than owner-occupied housing, and coincides with a surge in dividend incomes. Overall, I estimate that behavioral responses account for approximately 7% of the revenue loss due the reform, indicating that the mechanical impact dominates. These findings have two key implications. First, from an equity perspective, exempting financial assets from wealth taxation primarily served as a tax cut for wealthy households in France. Second, the efficiency cost of taxing real estate more heavily than other assets appears limited.
“Avoiding Transparency through Offshore Real Estate: Evidence from the UK” (with Jeanne Bomare)
Latest version, Sciences Po WP, EU Tax Observatory WP
Young Researcher Award, European Union Tax Observatory
In the middle of the 2010s, countries implemented the most comprehensive policy ever enacted to tackle financial tax evasion: the Common Reporting Standard (CRS). We study the effect of this policy on the investment patterns of offshore account holders. The CRS is a multilateral automatic exchange of information standard that introduces cross-border reporting on financial assets but not on real estate. Using administrative data on real estate purchases made by foreign companies in the UK, our paper provides evidence that offshore users shifted financial assets to real estate assets to avoid the new reporting requirements. We show that real estate investments from tax havens that are more exposed to the CRS significantly increase after the introduction of the policy. We estimate that around $45 billion has been invested in the UK real estate market between 2013 and 2016 in response to the CRS. Our results suggest that real estate assets account for a growing share of offshore portfolios, partly because of the increased transparency in ownership of cross-border financial assets.
“Push and Pull Factors of Offshore Tax Evasion: Evidence from Bank Transfer Data” (with Annette Alstadsaeter, Niels Johannesen and Gabriel Zucman)
This paper combines Norwegian administrative tax returns with international bank transfer data in order to study the push and pull factors of capital flight to tax haven jurisdictions. Focusing on taxpayers transferring large funds to tax havens, we document that these big transfers lead to a subsequent drop in tax payments and effectively predict later participation in a tax amnesty program.Then, we study the impact of both the level of taxes and the degree of tax transparency on evasion decisions – as proxied by transfers to and from haven countries and find that both elements correlate with variations in tax non-compliance behaviors.
“Avoiding Evasion: Effects of the Automatic Exchange of Information” (with Eva Davoine and Wouter Leenders)
We study the effect of newly implemented international tax transparency measures on households compliance behavior. To do so, we match French administrative tax records to account-level information reported to the French tax authority by foreign banks through the Automatic Exchange of Information (AEoI). We find that in 2021 French taxpayers hold a substantial share of their financial wealth in foreign accounts, a substantial share of which is concentrated in a few financial centers like!:m Luxembourg and Switzerland. We also document a steep income gradient in the propensity to hold assets in foreign financial institutions. Turning to the impact of the AEoI on tax compliance and government revenue, we present suggestive evidence that the recent improvement in global tax transparency is likely to have reduced overall tax evasion and increased government revenue.