Inequality in tax evasion: the case of the Spanish income tax

Research output: Contribution to journalArticle


This paper estimates tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-04.
The approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income, but introduces two methodological innovations which could be useful for further studies: a correction for sample selection with a Heckman two-step setting, and the calculation of different evasion rates for top incomes with an interaction term.
Evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 percent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 percent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 percent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should therefore be revised upwards.
Originality / value
This is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.


Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics and Business


  • Income inequality, Personal income tax, Progressivity, Redistribution, Tax evasion
Original languageEnglish
Pages (from-to)89-109
JournalApplied Economic Analysis
Issue number83
Publication statusPublished - 2020 Jul 15
Publication categoryResearch