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The tax-price elasticity of offshore tax avoidance: Evidence from Ecuadorian transaction data

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  • Jakob Brounstein

Abstract

This study leverages a unique data set on the universe of transactions exiting the Ecuadorian economy to estimate the tax-price elasticity of demand for tax-sheltering activities using offshore fiscal havens. I determine this elasticity quasi-experimentally by comparing the evolution in funds sent by individuals and corporations to tax havens for different purposes (e.g. dividend payments, bank account deposits) versus similar transactions with non-tax havens around changes to the Ecuadorian Impuesto a la Salida de Divisas , which effectuated an ad valorem tax on transfers to tax havens.

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  • Jakob Brounstein, 2021. "The tax-price elasticity of offshore tax avoidance: Evidence from Ecuadorian transaction data," WIDER Working Paper Series wp-2021-187, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-187
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    References listed on IDEAS

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    1. AndrewK. Rose & MarkM. Spiegel, 2007. "Offshore Financial Centres: Parasites or Symbionts?," Economic Journal, Royal Economic Society, vol. 117(523), pages 1310-1335, October.
    2. Emmanuel Saez, 2010. "Do Taxpayers Bunch at Kink Points?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 180-212, August.
    3. Jacob A. Mortenson & Andrew Whitten, 2020. "Bunching to Maximize Tax Credits: Evidence from Kinks in the US Tax Schedule," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 402-432, August.
    4. Wier, Ludvig, 2020. "Tax-motivated transfer mispricing in South Africa: Direct evidence using transaction data," Journal of Public Economics, Elsevier, vol. 184(C).
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