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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 (10)

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Related works:
Working Paper: Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment (2019) Downloads
Working Paper: Tax Audits as Scarecrows. Evidence from a Large-Scale Field Experiment (2019) Downloads
Working Paper: Tax audits as scarecrows. Evidence from a large-scale field experiment (2019) Downloads
Working Paper: Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment (2017) Downloads
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DOI: 10.1257/pol.20200321

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