Effects of signalling tax evasion on redistribution and voting preferences: Evidence from the Panama papers

Abstract

This paper provides empirical evidence that individuals substantially revise their stated wealth redistribution preferences after fiscal scandals. The 2016 Panama Papers scandal revealed top-income tax evasion behaviour simultaneously worldwide. The empirical investigation exploits this event as a quasi-natural experiment. I rely on two original datasets, a UK household longitudinal dataset and a survey conducted in 22 European countries. I use a difference-in-differences strategy and find that pro-redistribution statements increased between 2% and 3.3% after the scandal. Responses are heterogeneous and larger for right-wing individuals and low-income individuals. This change in wealth redistribution preferences is likely to have been translated into a slight change in votes. The results suggest an increase in stated voting intentions for the left and a decrease for the right. Complementary estimations reveal that more media coverage and more individuals involved by country increase the magnitude of the response.