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Social networks and tax avoidance. Evidence from a well-defined Norwegian tax shelter

Annette Alstadsæter (), Wojciech Kopczuk () and Kjetil Telle

Discussion Papers from Statistics Norway, Research Department

Abstract: In 2005, over 8% of Norwegian shareholders transferred their shares to new (legal) tax shelters intended to defer taxation of capital gains and dividends that would otherwise be taxable in the aftermath of 2006 reform. Using detailed administrative data we identify family networks and describe how take up of tax avoidance progresses within a network. A feature of the reform was that the ability to set up a tax shelter changed discontinuously with individual shareholding of a firm and we use this fact to estimate the causal effect of availability of tax avoidance for a taxpayer on tax avoidance by others in the network. We find that take up in a social network increases the likelihood that others will take up. This suggests that taxpayers affect each other's decisions about tax avoidance, highlighting the importance of accounting for social interactions in understanding enforcement and tax avoidance behavior, and providing a concrete example of “optimization frictions” in the context of behavioral responses to taxation.

Keywords: Tax avoidance; social interaction; networks (search for similar items in EconPapers)
JEL-codes: H25 H26 H32 L14 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-10
New Economics Papers: this item is included in nep-acc, nep-law, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27) Track citations by RSS feed

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Related works:
Journal Article: Social networks and tax avoidance: evidence from a well-defined Norwegian tax shelter (2019) Downloads
Working Paper: Social networks and tax avoidance: Evidence from a well-defined Norwegian tax shelter (2018) Downloads
Working Paper: Social Networks and Tax Avoidance: Evidence from a Well-Defined Norwegian Tax Shelter (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:886

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