The next Economics Seminar of Paris-Saclay will take place on Thursday, February 9 from 12h15 to 13h15. Bertrand Garbinti (CREST-ENSAE) will present Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax (joint with Jonathan Goupille-Lebret, Mathilde Munoz, Stefanie Stantcheva et Gabriel Zucman)
We study a reform of the French wealth tax that dramatically reduced the amount of information that taxpayers must self-report below a certain level of wealth. Combining administrative micro-data with dynamic bunching and difference-in-differences approaches, we find large behavioral responses to this switch to a low-information regime. The reform caused a 0.5 percentage points average decrease in the annual growth rate of wealth reported by treated taxpayers each year following the switch to the low-information regime. This reduction is driven by a 4 percentage points decrease for taxpayers bunching at the information discontinuity threshold. Consistent with opacity leading to lower compliance, treated households do not experience a real change in their (third-party) reported labor and capital income. The wealth tax base becomes much more elastic in the low-information regime, illustrating the first-order role of information policy choices for tax base elasticities.