 The Big Bang: Tax Evasion After Automatic Exchange of Information Under FATCA and CRSLeo Ahrens and Fabio Bothner New Political Economy, 2020, vol. 25, issue 6, 849-864 Abstract: After decades of ineffective attempts to fight tax evasion, the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) recently implemented the first encompassing international exchange of tax-related information on an automatic basis. This is an important development because tax evasion contributes to rising socio-political inequality and political sovereignty losses. This article assesses the treaties’ impact on tax evasion by conducting a difference-in-difference analysis of cross-border asset data. The results show that the treaties are successful. Household assets in tax havens that are not hidden behind corporate identities are estimated to be 67 per cent lower than they would have been without automatic exchange of information. Furthermore, this reduction is not offset by an increase in treaty circumvention using identity concealment or asset shifting to non-compliant jurisdictions. FATCA and CRS thus implement the first effective international cooperation against tax evasion. The results imply that political globalisation is capable to mitigate the political sovereignty losses and rise of inequality caused by economic globalisation. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:cnpexx:v:25:y:2020:i:6:p:849-864 Ordering information: This journal article can be ordered from DOI: 10.1080/13563467.2019.1639651 Access Statistics for this article New Political Economy is currently edited by Professor Colin Hay More articles in New Political Economy from Taylor & Francis Journals |
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