Tax simplicity or simplicity of evasion? Evidence from self-employment taxes in France

Aghion, Philippe ORCID: 0000-0002-9019-1677, Gravoueille, Maxime, Lequien, Matthieu and Stantcheva, Stefanie (2024) Tax simplicity or simplicity of evasion? Evidence from self-employment taxes in France. CEP Discussion Papers (CEPDP1999). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

We use individual panel data and the introduction of simpler tax regimes for the self-employed in France to assess the extent to which individuals' shift towards the simpler tax regimes is driven by tax simplicity and by tax evasion motives. We find evidence of a quest for simplicity from estimating the amount of bunching at the eligibility thresholds for the simpler self-employment tax regimes, and from observing that bunching is increasing in the degree of simplicity of the tax regime. We argue that tax evasion plays a significant role in explaining individuals' attraction towards simpler tax regimes. We develop a structural model to quantitatively assess the importance of simplicity and evasion motives for choosing a simpler self-employment regime. The model suggests a considerable preference for tax simplicity, ranging from 162 to 5654 euros per year per self-employed individual, which in turn entails a sizeable evasion elasticity.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HJ Public Finance
JEL classification:	H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
Date Deposited:	06 Feb 2025 16:03
Last Modified:	11 Sep 2025 05:20
URI:	http://eprints.lse.ac.uk/id/eprint/126804

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