The $100 million nudge: Increasing tax compliance of firms using a natural field experiment

Justin E. Holz, John List, Alejandro Zentner, Marvin Cardoza and Joaquin E. Zentner

Journal of Public Economics, 2023, vol. 218, issue C

Abstract: This paper uses a natural field experiment to examine the effectiveness of deterrence messages on tax compliance in the Dominican Republic. In collaboration with the tax authority, we sent messages to 56,310 firms that collectively paid $700 million in the year before the experiment. Our field experiment complements a tax enforcement reform in the Dominican Republic a year before our intervention. Sharing information about prison sentences or the public disclosure of evasion arising from the tax enforcement reform increases tax revenue by $184 million (0.22% of GDP). Using a unique sample that covers the entire firm size distribution, we show that the largest firms, that pay 84% of all corporate income taxes and typically have been excluded from this type of intervention, are highly responsive to our information treatments.

Keywords: Taxation; Subsidies and revenue; Tax evasion and avoidance; Micro-based behavioral economics; Fiscal policies and behavior of firms (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:218:y:2023:i:c:s0047272722001815

DOI: 10.1016/j.jpubeco.2022.104779

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