Tax Simplicity or Simplicity of Evasion? Evidence from Self-Employment Taxes in France

Philippe Aghion; Maxime Gravoueille; Matthieu Lequien; Stefanie Stantcheva

doi:10.3386/w24049

Tax Simplicity or Simplicity of Evasion? Evidence from Self-Employment Taxes in France

Philippe Aghion, Maxime Gravoueille, Matthieu Lequien & Stefanie Stantcheva

Working Paper 24049

DOI 10.3386/w24049

Issue Date November 2017

Revision Date March 2025

Tax systems are often criticized for being overly complex, leading some countries to offer simplified regimes to some taxpayers. Using panel data on French income tax returns, we show that simplified regimes for the self-employed create substantial bunching just below their eligibility thresholds. This bunching in turn is driven not only by a pure taste for simplicity but also by tax evasion. We then develop a structural model to quantify the relative importance of these two motives. Our estimates reveal a significant preference for simplicity–valued at 49 to 495 euros annually per self-employed worker–alongside a sizable evasion elasticity.

A much earlier version of this paper, not intended for publication, circulated under the title “Tax Simplicity and Heterogeneous Learning” as NBER Working paper 24049. The earlier working paper did not have panel data, which only subsequently became available to researchers, so this new paper provides a different analysis made possible by this data. The original working paper was in collaboration with Ufuk Akcigit, whose invaluable inspiration greatly contributed to shaping it and to whom we are indebted. We thank Salome Baslandze, Antonin Bergeaud, Pierre Boyer, Antoine Bozio, Antoine Ferey, Bertrand Garbinti, Johnathan Goupille-Lebret, Larry Katz, Henrik Kleven, Etienne Lehmann, Anasuya Raj, and participants at the NBER Entrepreneurship Summer Institute, Paris seminar participants for useful comments and feedback on the earlier version. Stantcheva gratefully acknowledges support from NSF CAREER Grant #1654517. Access to confidential data is offered by the CASD – Centre d’Accès Sécurisé aux Données. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Copy Citation

Philippe Aghion, Maxime Gravoueille, Matthieu Lequien, and Stefanie Stantcheva, "Tax Simplicity or Simplicity of Evasion? Evidence from Self-Employment Taxes in France," NBER Working Paper 24049 (2017), https://doi.org/10.3386/w24049.
- December 12, 2017
- May 3, 2024

Tax Simplicity or Simplicity of Evasion? Evidence from Self-Employment Taxes in France

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