There’s evidence that tax evasion costs developed economies a significant sum in lost tax revenue. In separate research, Alstadsæter, Johannesen, and Zucman find that the equivalent of as much as 60 percent of GDP in Russia is held abroad, and the offshore wealth of several other countries exceeds 50 percent of GDP. Most of that wealth goes untaxed, they say.
But examining what happens when tax evaders come clean through amnesty programs, the researchers observe that amnesty recipients don’t simply replace illegal tax evasion with legal methods of tax avoidance—there is a sharp and durable increase in the wealth they report and pay tax on. It appears, therefore, that fighting offshore tax evasion is likely a worthwhile endeavor for most governments.
Zucman hopes to continue using leaks, such as the recently released Paradise Papers, and random audits to understand evasion in other developed countries where these types of data are available. With tax compliance lower outside of Scandinavian countries, including in the United States, accurately gauging evasion is critical. “The results may be even more striking and spectacular in countries like France or the United States because these countries have even more wealth in tax havens,” he says.