Do tax leaks impact tax policy preferences?

Over the past two decades, journalists, whistleblowers, and activists have revealed the massive scope of tax evasion and avoidance worldwide. These revelations have often come in the form of "tax leaks", that is, as “significant, unauthorized release[s] of private taxpayer information [...] through channels other than established protocols” (Oei and Ring 2018, 9). Often published under catchy names like the "Panama Papers" or "LuxLeaks", tax leaks have prompted political elites to take significant action, at both the national and international levels, to curtail tax competition and enhance tax transparency. In this paper, we study the bottom-up processes that translate tax leaks into political pressure on political elites. More specifically, we assess if learning about tax leaks affects the policy preferences held by the electorate, if it changes people's political speech, and if the bottom-up pressure generated by tax leaks induces behavioral change in elected representatives. To answer these questions, we use a mixed-methods approach and proceed in three steps. First, we conduct a randomized survey experiment in the UK to test whether respondents exposed to news reporting about tax leaks show different attitudes towards tax policy than those in a control group. Second, we leverage a quasi-experimental setting to study how the online comments published by the readers of a UK newspaper are affected by the surprising release of the 2016 Panama Papers. Finally, we link our individual-level studies to elite behavior, using large language models to chart parliamentary debates on tax policy in the UK over the same period. Our paper contributes to literature on attitudes towards tax policy by asking how international developments such as tax leaks affect domestic tax policy preferences.