The Redistributive Impact of Hypocrisy in International Taxation

Together with his co-author Max Schaub, COFFERS researcher Lukas Hakelberg just published an article in Regulation & Governance on the redistributive impact of the Foreign Account Tax Compliance Act (FATCA) and the multilateral automatic exchange of information (AEI) regime it precipitated.

The authors perform a difference-in-differences analysis comparing banks’ deposit and debt security liabilities to foreign non-banks in tax havens and non-havens before and after the adoption of FATCA in 2010. They find that tax havens on average lost more portfolio investment to the introduction of the AEI than to the 2008 financial crisis. In contrast, portfolio investment in non-havens grew rapidly between 2010 and 2014. This divergence becomes even stronger when including the US in the non-haven group, which suggests that its decision not to reciprocate the AEI has recently afforded the country a competitive advantage in the attraction of hidden capital.

You can access the article here.

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