Inequality in tax evasion: the case of the Spanish income tax

Purpose: the purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach: the approach follows Feldman and Slemrod (2007) by exploiting the r...

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Detalles Bibliográficos
Autor: Torregrosa Hetland, Sara
Tipo de recurso: artículo
Estado:Versión publicada
Fecha de publicación:2020
País:España
Institución:Universidad Pública de Navarra
Repositorio:Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
OAI Identifier:oai:academica-e.unavarra.es:2454/52813
Acceso en línea:https://hdl.handle.net/2454/52813
Access Level:acceso abierto
Palabra clave:Income inequality
Personal income tax
Progressivity
Redistribution
Tax evasion
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spelling Inequality in tax evasion: the case of the Spanish income taxTorregrosa Hetland, SaraIncome inequalityPersonal income taxProgressivityRedistributionTax evasionPurpose: the purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach: the approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income but introduces two methodological innovations, which could be useful for further studies: correction for sample selection with a Heckman two-step setting and the calculation of different evasion rates for top incomes with an interaction term. Findings: evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 per cent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 per cent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 per cent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should, therefore, be revised upwards. Originality/value: this is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.The author acknowledge financial support from the Spanish Ministry of Education's scholarship program Formación del Profesorado Universitario and the Research Project ECO2012-39169-C03-03.EmeraldEconomíaEkonomia2020info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfhttps://hdl.handle.net/2454/52813reponame:Academica-e. Repositorio Institucional de la Universidad Pública de Navarrainstname:Universidad Pública de NavarraInglésinfo:eu-repo/grantAgreement/MINECO//ECO2012-39169-C03-03© Sara Torregrosa Hetland. Published in Applied Economic Analysis. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence.https://creativecommons.org/licenses/by/4.0/info:eu-repo/semantics/openAccessoai:academica-e.unavarra.es:2454/528132026-06-17T12:41:47Z
dc.title.none.fl_str_mv Inequality in tax evasion: the case of the Spanish income tax
title Inequality in tax evasion: the case of the Spanish income tax
spellingShingle Inequality in tax evasion: the case of the Spanish income tax
Torregrosa Hetland, Sara
Income inequality
Personal income tax
Progressivity
Redistribution
Tax evasion
title_short Inequality in tax evasion: the case of the Spanish income tax
title_full Inequality in tax evasion: the case of the Spanish income tax
title_fullStr Inequality in tax evasion: the case of the Spanish income tax
title_full_unstemmed Inequality in tax evasion: the case of the Spanish income tax
title_sort Inequality in tax evasion: the case of the Spanish income tax
dc.creator.none.fl_str_mv Torregrosa Hetland, Sara
author Torregrosa Hetland, Sara
author_facet Torregrosa Hetland, Sara
author_role author
dc.contributor.none.fl_str_mv Economía
Ekonomia
dc.subject.none.fl_str_mv Income inequality
Personal income tax
Progressivity
Redistribution
Tax evasion
topic Income inequality
Personal income tax
Progressivity
Redistribution
Tax evasion
description Purpose: the purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach: the approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income but introduces two methodological innovations, which could be useful for further studies: correction for sample selection with a Heckman two-step setting and the calculation of different evasion rates for top incomes with an interaction term. Findings: evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 per cent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 per cent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 per cent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should, therefore, be revised upwards. Originality/value: this is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.
publishDate 2020
dc.date.none.fl_str_mv 2020
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/2454/52813
url https://hdl.handle.net/2454/52813
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv info:eu-repo/grantAgreement/MINECO//ECO2012-39169-C03-03
dc.rights.none.fl_str_mv https://creativecommons.org/licenses/by/4.0/
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dc.publisher.none.fl_str_mv Emerald
publisher.none.fl_str_mv Emerald
dc.source.none.fl_str_mv reponame:Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
instname:Universidad Pública de Navarra
instname_str Universidad Pública de Navarra
reponame_str Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
collection Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
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