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The network structure of global tax evasion Evidence from the Panama Papers

Author

Listed:
  • Garcia Alvarado Fernando
  • Mandel Antoine

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper builds on recent insights from network theory and on the rich dataset made available by the Panama Papers in order to investigate the micro-economic dynamics of tax-evasion. We model offshore financial entities documented in the Panama Papers as links between jurisdictions in the global network of tax evasion. A quantitative analysis shows that the resulting network, far from being a random collection of bilateral links, has key features of complex networks such as a core-periphery structure and a fat-tail degree distribution. We argue that these structural features imply that policy must adopt a systemic perspective to mitigate tax evasion. We offer three sets of insights from this perspective. First, we identify through centrality measures tax havens that ought to be priority policy targets. Second, we show that efficient tax treaties must contain exchange information clauses and link tax-havens to non-haven jurisdictions. Third, we show that the optimal deterrence strategies for a social-planner facing a strategic tax-evader in a Stackelberg competition can be characterized using the notion of Bonacich centrality.

Suggested Citation

  • Garcia Alvarado Fernando & Mandel Antoine, 2022. "The network structure of global tax evasion Evidence from the Panama Papers," Post-Print hal-03881348, HAL.
  • Handle: RePEc:hal:journl:hal-03881348
    DOI: 10.1016/j.jebo.2022.03.024
    Note: View the original document on HAL open archive server: https://hal.science/hal-03881348
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    References listed on IDEAS

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    More about this item

    Keywords

    H26 H87 D85 C54 Tax Evasion Socio-economic Networks Game Theory; H26; H87; D85; C54 Tax Evasion; Socio-economic Networks; Game Theory;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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