Taxing Hidden Wealth: The Consequences of US Enforcement Initiatives on Evasive Foreign Accounts
American Economic Journal: Economic Policy
vol. 12,
no. 3, August 2020
(pp. 312-46)
(Complimentary)
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.Citation
Johannesen, Niels, Patrick Langetieg, Daniel Reck, Max Risch, and Joel Slemrod. 2020. "Taxing Hidden Wealth: The Consequences of US Enforcement Initiatives on Evasive Foreign Accounts." American Economic Journal: Economic Policy, 12 (3): 312-46. DOI: 10.1257/pol.20180410Additional Materials
JEL Classification
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H26 Tax Evasion and Avoidance
- K34 Tax Law
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