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

Philippe Aghion, Maxime Gravoueille, Matthieu Lequien and Stefanie Stantcheva

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: simplicity of evasion; taxation of self-employment; France; tax simplicity (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2024-05-16
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