Taxing hidden wealth: the consequences of U.S. enforcement initiatives on evasive foreign accounts

Johannesen, Niels, Langetieg, Patrick, Reck, Daniel ORCID: 0000-0002-5732-4706, Risch, Max and Slemrod, Joel (2020) Taxing hidden wealth: the consequences of U.S. enforcement initiatives on evasive foreign accounts. American Economic Journal: Economic Policy, 12 (3). 312 - 346. ISSN 1945-7731

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Abstract

In 2008, the IRS initiated efforts to curb the use of offshore accounts to evade taxes. This paper uses administrative microdata to examine the impact of enforcement efforts on taxpayers’ reporting of offshore accounts and income. We find that enforcement caused approximately 50,000 individuals to disclose offshore accounts with a combined value of about $100 billion. Most disclosures happened outside offshore voluntary disclosure programs, by individuals who never admitted prior noncompliance. Disclosed accounts were concentrated in countries often characterized as tax havens. Enforcement-driven disclosures increased annual reported capital income by $2-$4 billion, corresponding to $0.6-$1.2 billion in additional tax revenue.

Item Type:	Article
Official URL:	https://www.aeaweb.org/journals/pol
Additional Information:	© 2020 American Economic Association
Divisions:	Economics
Subjects:	H Social Sciences > HJ Public Finance
JEL classification:	H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion K - Law and Economics > K3 - Other Substantive Areas of Law > K34 - Tax Law
Date Deposited:	04 Aug 2020 13:33
Last Modified:	07 Apr 2024 04:00
URI:	http://eprints.lse.ac.uk/id/eprint/105864

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