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How would tax evasion shape the effects of higher capital taxes?

Rising wealth inequality is evoking calls to tax capital more heavily, but concerns abound that the wealthy would respond by concealing more of their assets offshore. In our working paper “Tax Evasion and Capital Taxation,” Shahar Rotberg and I build a general equilibrium model of offshore tax evasion to analyze how these policies would affect the economy. But for evasion, raising capital income taxes and taxing wealth would reduce inequality and could increase tax revenue substantially. In reality, however, inequality would rise and tax revenues would rise modestly or even fall.

How (and why) do exporter dynamics vary across destinations?

Microeconomic dynamics of exporting firms are key drivers of macroeconomic trade fluctuations. In my working paper “Export Market Penetration Dynamics,” I show that these micro dynamics vary significantly across foreign markets: exporters exit less frequently in larger markets, but new exporters are smaller and exit more frequently. To understand the sources of these differences and explore their aggregate implications, I build a model that draws from two approaches: the static quantitative trade literature, which emphasizes the role of geography in shaping exporting costs; and the dynamic trade literature, which emphasizes the role of these costs in determining when firms decide to start and stop exporting. When calibrated to match the data, the model predicts stronger and more gradual responses to trade reforms and more pronounced exchange-rate hysteresis in smaller markets.

About me

I am an associate professor in the University of Toronto economics department. I hold a B.A. in mathematical economics from Pomona College and a Ph.D. in economics from the University of Minnesota. My research uses quantitative models to answer questions in open-economy macro, trade, and public finance. Some of my recent papers study the contribution of trade deficits to declining goods-sector employment in the United States, the cost of uncertainty about Brexit, and the macroeconomic consequences of offshore tax evasion.

Contact information:
150 St. George St., Toronto, ON M5S 3G7
www.joesteinberg.com
joseph.steinberg@utoronto.ca
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