Different From You and Me: Tax Enforcement and Sophisticated Tax Evasion by the Wealthy

This paper reviews recent research on tax evasion by high-income, high-wealth individuals and attempts to draw out some lessons for policymaking. We review the key concepts around tax evasion, and we summarize the key insights from economic studies of tax evasion in the full population. We contrast the understanding of tax evasion that emerges from such prior work with the findings of recent studies on high-income, high-wealth taxpayers specifically, which highlights the relative sophistication of the evasive strategies favoured by wealthy taxpayers. Finally, we characterize the key steps in the tax enforcement process as they pertain to the high-wealth population, and describe how these steps have played out in specific areas like the fight against offshore tax evasion (JEL H24, H26, K34).