Welfare and distribution effects of bank secrecy laws
Series
Department of Economics discussion paper
Type
discussion paper
Date Issued
2005-03-01
Author(s)
Abstract
We analyze an overlapping-generations world comprising two groups of small countries whose preferences for public spending differ. Key steady-state effects from introducing bank secrecy and a withholding tax in countries with low government spending are: a reduction of global capital and income, a shift of wealth towards bank-secrecy countries, and falling consumption, welfare and government spending despite rising tax rates in the rest of the world. Qualitative results are robust to changes in tax-payer honesty, the Leviathan effect (permitting governments to drive public spending higher than citizens prefer), and the fraction of withholding taxes repatriated to countries of residence.
Language
English
Keywords
bank secrecy
welfare
distribution
tax evasion
HSG Classification
contribution to scientific community
Refereed
No
Number
2005-7
Start page
38
Subject(s)
Division(s)
Eprints ID
12301