Social networks and tax avoidance. Evidence from a well-defined Norwegian tax shelter

Arbeitspapier

In 2005, over 8% of Norwegian shareholders transferred their shares to new (legal) tax shelters intended to defer taxation of capital gains and dividends that would otherwise be taxable in the aftermath of 2006 reform. Using detailed administrative data we identify family networks and describe how take up of tax avoidance progresses within a network. A feature of the reform was that the ability to set up a tax shelter changed discontinuously with individual shareholding of a firm and we use this fact to estimate the causal effect of availability of tax avoidance for a taxpayer on tax avoidance by others in the network. We find that take up in a social network increases the likelihood that others will take up. This suggests that taxpayers affect each other's decisions about tax avoidance, highlighting the importance of accounting for social interactions in understanding enforcement and tax avoidance behavior, and providing a concrete example of “optimization frictions” in the context of behavioral responses to taxation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 886

Classification and Topics

• Classification: Wirtschaft ; Tax Evasion and Avoidance ; Business Taxes and Subsidies including sales and value-added (VAT) ; Fiscal Policies and Behavior of Economic Agents: Firm ; Transactional Relationships; Contracts and Reputation; Networks
• Subject: Tax avoidance ; social interaction ; networks

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alstadsæter, Annette ; Kopczuk, Wojciech ; Telle, Kjetil
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/192868
• Last update: 10.03.2025, 11:44 AM CET