Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment

Marcelo Bergolo, Rodrigo Ceni, Guillermo Cruces, Matias Giaccobasso and Ricardo Perez-Truglia

American Economic Journal: Economic Policy, 2023, vol. 15, issue 1, 110-53

Abstract: The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with a tax authority to address this question. We sent letters to 20,440 small- and medium-sized firms that collectively paid more than US$200 million in taxes per year. We find that providing information about audits significantly affected tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972).

JEL-codes: C93 D22 H25 H26 K34 L25 O14 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20200321 (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20200321.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20200321.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment (2019)
Working Paper: Tax Audits as Scarecrows. Evidence from a Large-Scale Field Experiment (2019)
Working Paper: Tax audits as scarecrows. Evidence from a large-scale field experiment (2019)
Working Paper: Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:15:y:2023:i:1:p:110-53

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/pol.20200321

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().