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Authors
Annette Alstadsæter (Skatteforsk Centre for Tax Research), Julie Brun Bjørkheim (Norwegian School of Economics), Ronald B. Davies (University College Dublin & Skatteforsk - Centre for Tax Research) & Johannes Scheuerer (Norwegian University of Life Sciences)
Abstract
The ability of multinationals to avoid taxes by shifting profits to tax havens has
drawn increasing criticism on both revenue and equity grounds. Using a staggered difference-in-differences approach and matched Norwegian employer-employee data, we show that haven-using firms pay higher compensation. This is particularly apparent in services where the haven pay premium is nearly 2%. Further, there is substantial within-firm heterogeneity with high-skill occupations earning higher premia. These estimates suggest that income inequality growth would have been 13% lower without havens. Finally, we estimate that higher employee tax payments offset 8% of the corporate tax loss due to haven use.