Research

Taxation and Migration by the Super-rich (updated)
Arun Advani, David Burgherr, Andy Summers (2023), IZA Discussion Paper 16432.

Using administrative data on the globally connected super-rich in the UK, we study the effect of a large tax reform on migration behaviour. Prior to 2017, offshore investment returns for ‘non-doms’ – individuals tax-resident in the UK but with connections to other countries – were untaxed. People making use of that tax status are strongly concentrated at the top of the income distribution: 86% are in the UK top 1% and 29% in the top 0.1% once overseas investment income is taken into account. A reform in 2017 brought long-stayers, who had been in the UK for at least 15 of the last 20 years, into the standard tax system, reducing their effective net-of-average-tax rate by 18%. We find that emigration responses were modest: our central estimate is that the emigration rate increases by 0.26 percentage points for a 1% decline in the net-of-tax rate, and we can rule out increases larger than 0.4 percentage points. Dispelling fears that the targeted taxpayers were able to circumvent the tax hike, we find large average increases in income reported and tax paid in the UK of more than 150%.

Award: IIPF Young Economists Award 2023

Other materials: policy brief, video explainer, op-ed in New Statesman and Advantage (CAGE magazine)

Media coverage: BBC News, BBC Radio 5 Live, BBC The Context, Bloomberg, Fairness Foundation, Financial Times (1), Financial Times (2), Guardian (1), Guardian (2), Independent, New Statesman (1), New Statesman (2), Resolution Foundation, Sun, Tax Notes, Tax Policy Associates, Telegraph, The Times, Washington Post

Behavioral Responses to a Pension Savings Mandate: Quasi-experimental Evidence from Swiss Tax Data
David Burgherr (2022), CAGE Working Paper 645.

A straightforward policy tool to boost retirement savings is requiring workers to contribute some fraction of their earnings to a pension account. Drawing on detailed administrative tax data on income, wealth, and savings, I study the savings response to the occupational pension savings mandate in Switzerland using regression discontinuity and difference-in-differences designs. I find that employees respond to being obliged to contribute to an occupational pension account by raising voluntary forms of retirement savings such as preferentially taxed private pension savings and occupational pension buy-ins. The crowding-in effect on private pension savings is driven by reduced information frictions and increased salience of retirement savings and facilitated by having another earner in the household. The additional retirement savings appear to be funded by reduced private savings rather than lower current consumption, leaving total savings unaffected by the mandate, although this is imprecisely estimated.

Other materials: op-ed in Advantage (CAGE magazine)

The UK’s Global Economic Elite: A Sociological Analysis Using Tax Data
Arun Advani, David Burgherr, Mike Savage, Andy Summers (2022), CAGE Working Paper 570.

We show the importance of international ties amongst the UK’s global economic elite, by exploiting administrative data derived from tax records. We show how this data can be used to shed light on the kind of transnational dynamics which have long been hypothesised to be of major significance in the UK, but which have previously proved intractable to systematic study. Our work reveals the enduring and distinctive influence of long-term imperial forces, especially to the former ‘white settler’ ex-dominions which have been called the ‘anglosphere’. These are allied to more recent currents associated with European integration and the rise of Asian economic power. Here there are especially strong ties to the ‘old EU-6’ nations of France, Germany, Netherlands, Belgium, Luxembourg, and Italy. The incredible detail and universal coverage of our data means that we can study those at the very top with a level of granularity that would be impossible using traditional survey sources. We find compelling support for the public perception that non-doms are disproportionately highly affluent individuals who can be viewed as a part of a global elite. However, whilst there is some evidence for the stereotype of the global wealthy parking themselves in the UK, this underplays the significance of the working rich. Our analysis also reveals the remarkable concentration of non-doms in central areas of London.

Other materials: policy brief, video explainer, data for the charts

Media coverage: BBC, BBC Newsnight, Bloomberg, Channel 4, Daily Mail, Economist, Everyday Society, Financial Times (1), Financial Times (2), Guardian (1), Guardian (2), Guardian (3), Independent, Indian Express, Mirror, New Statesman, Resolution Foundation, Reuters, Sydney Morning Herald, The Times (1), The Times (2), Washington Post, Les Echos, Frankfurter Allgemeine Zeitung

The Costs of Administering a Wealth Tax
David Burgherr (2021), Fiscal Studies, 42 (3-4), 677–697.

I assess the costs of administering a wealth tax for taxpayers and the tax authority in the UK context, based on evidence from existing UK taxes on wealth and comprehensive wealth taxes that have been imposed in other countries. My central estimate is that a well-designed wealth tax generates costs to taxpayers of 0.1 per cent of taxable wealth and costs to the tax authority of 0.05 per cent of taxable wealth. I discuss how these costs depend on design choices. My findings can inform revenue modelling and help to evaluate the desirability of wealth taxes.