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Wealth Tax Enforcement: The Role of Tax and Institutional Design

Author

Listed:
  • José María Durán-Cabré
  • Alejandro Esteller-Moré
  • Christos Kotsogiannis
  • Luca Salvadori

Abstract

Enforcing wealth tax compliance among high-net-worth individuals is particularly challenging. Using administrative data on the Net Wealth Tax for Catalan taxpayers over the 2011–2020 period, this paper evaluates the impact of audits on voluntary compliance. The evidence suggests that wealth tax audits do enhance compliance, but the impact is short-lived — and driven by taxpayers rebalancing their tax evasion and avoidance responses. On the institutional side, the results indicate that Spain's overlapping tax audit mandates can create coordination frictions that reduce the efficiency and effectiveness of audit-based enforcement of the New Wealth Tax. Effective enforcement depends not only on robust audit strategies, but also on coherent institutional design and sound tax policy.

Suggested Citation

  • José María Durán-Cabré & Alejandro Esteller-Moré & Christos Kotsogiannis & Luca Salvadori, 2025. "Wealth Tax Enforcement: The Role of Tax and Institutional Design," Working Papers 1527, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1527
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    References listed on IDEAS

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    1. David Henning & Christos Kotsogiannis & Jukka Pirttilä & Luca Salvadori, 2025. "One and done or repeat inspections? The differential effect on multiple tax audits," WIDER Working Paper Series wp-2025-110, World Institute for Development Economic Research (UNU-WIDER).
    2. Sant’Anna, Pedro H.C. & Zhao, Jun, 2020. "Doubly robust difference-in-differences estimators," Journal of Econometrics, Elsevier, vol. 219(1), pages 101-122.
    3. Gemmell, Norman & Ratto, Marisa, 2012. "Behavioral Responses to Taxpayer Audits: Evidence From Random Taxpayer Inquiries," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 33-57, March.
    4. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    5. repec:dau:papers:123456789/11056 is not listed on IDEAS
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    Keywords

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    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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