Tax Audits as scarecrows. Evidence from a large-scale field experiment

Autores
Bergolo, Marcelo; Ceni, Rodrigo; Cruces, Guillermo Antonio; Giaccobasso, Matias; Perez Truglia, Ricardo
Año de publicación
2019
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
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 Uruguays tax authority to address this question. We sent letters to 20,440 small- and medium sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process,based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.
Fil: Bergolo, Marcelo. Universidad de la República; Uruguay
Fil: Ceni, Rodrigo. Universidad de la República; Uruguay
Fil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Giaccobasso, Matias. University of California at Los Angeles; Estados Unidos
Fil: Perez Truglia, Ricardo. University of California at Los Angeles; Estados Unidos
Materia
tax
evasion
audits
penalties
frictions
Nivel de accesibilidad
acceso abierto
Condiciones de uso
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
Repositorio
CONICET Digital (CONICET)
Institución
Consejo Nacional de Investigaciones Científicas y Técnicas
OAI Identificador
oai:ri.conicet.gov.ar:11336/119855

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spelling Tax Audits as scarecrows. Evidence from a large-scale field experimentBergolo, MarceloCeni, RodrigoCruces, Guillermo AntonioGiaccobasso, MatiasPerez Truglia, Ricardotaxevasionauditspenaltiesfrictionshttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5The 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 Uruguays tax authority to address this question. We sent letters to 20,440 small- and medium sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process,based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.Fil: Bergolo, Marcelo. Universidad de la República; UruguayFil: Ceni, Rodrigo. Universidad de la República; UruguayFil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Giaccobasso, Matias. University of California at Los Angeles; Estados UnidosFil: Perez Truglia, Ricardo. University of California at Los Angeles; Estados UnidosIZA - Institute of Labor Economics2019-05info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/119855Bergolo, Marcelo; Ceni, Rodrigo; Cruces, Guillermo Antonio; Giaccobasso, Matias; Perez Truglia, Ricardo; Tax Audits as scarecrows. Evidence from a large-scale field experiment; IZA - Institute of Labor Economics; IZA Working Papers; 12335; 5-2019; 1-852365-9793CONICET DigitalCONICETenginfo:eu-repo/semantics/altIdentifier/url/https://www.iza.org/publications/dp/12335/tax-audits-as-scarecrows-evidence-from-a-large-scale-field-experimentinfo:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by-nc-sa/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2025-09-29T10:34:51Zoai:ri.conicet.gov.ar:11336/119855instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982025-09-29 10:34:51.709CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse
dc.title.none.fl_str_mv Tax Audits as scarecrows. Evidence from a large-scale field experiment
title Tax Audits as scarecrows. Evidence from a large-scale field experiment
spellingShingle Tax Audits as scarecrows. Evidence from a large-scale field experiment
Bergolo, Marcelo
tax
evasion
audits
penalties
frictions
title_short Tax Audits as scarecrows. Evidence from a large-scale field experiment
title_full Tax Audits as scarecrows. Evidence from a large-scale field experiment
title_fullStr Tax Audits as scarecrows. Evidence from a large-scale field experiment
title_full_unstemmed Tax Audits as scarecrows. Evidence from a large-scale field experiment
title_sort Tax Audits as scarecrows. Evidence from a large-scale field experiment
dc.creator.none.fl_str_mv Bergolo, Marcelo
Ceni, Rodrigo
Cruces, Guillermo Antonio
Giaccobasso, Matias
Perez Truglia, Ricardo
author Bergolo, Marcelo
author_facet Bergolo, Marcelo
Ceni, Rodrigo
Cruces, Guillermo Antonio
Giaccobasso, Matias
Perez Truglia, Ricardo
author_role author
author2 Ceni, Rodrigo
Cruces, Guillermo Antonio
Giaccobasso, Matias
Perez Truglia, Ricardo
author2_role author
author
author
author
dc.subject.none.fl_str_mv tax
evasion
audits
penalties
frictions
topic tax
evasion
audits
penalties
frictions
purl_subject.fl_str_mv https://purl.org/becyt/ford/5.2
https://purl.org/becyt/ford/5
dc.description.none.fl_txt_mv 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 Uruguays tax authority to address this question. We sent letters to 20,440 small- and medium sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process,based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.
Fil: Bergolo, Marcelo. Universidad de la República; Uruguay
Fil: Ceni, Rodrigo. Universidad de la República; Uruguay
Fil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Giaccobasso, Matias. University of California at Los Angeles; Estados Unidos
Fil: Perez Truglia, Ricardo. University of California at Los Angeles; Estados Unidos
description 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 Uruguays tax authority to address this question. We sent letters to 20,440 small- and medium sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process,based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.
publishDate 2019
dc.date.none.fl_str_mv 2019-05
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/11336/119855
Bergolo, Marcelo; Ceni, Rodrigo; Cruces, Guillermo Antonio; Giaccobasso, Matias; Perez Truglia, Ricardo; Tax Audits as scarecrows. Evidence from a large-scale field experiment; IZA - Institute of Labor Economics; IZA Working Papers; 12335; 5-2019; 1-85
2365-9793
CONICET Digital
CONICET
url http://hdl.handle.net/11336/119855
identifier_str_mv Bergolo, Marcelo; Ceni, Rodrigo; Cruces, Guillermo Antonio; Giaccobasso, Matias; Perez Truglia, Ricardo; Tax Audits as scarecrows. Evidence from a large-scale field experiment; IZA - Institute of Labor Economics; IZA Working Papers; 12335; 5-2019; 1-85
2365-9793
CONICET Digital
CONICET
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/https://www.iza.org/publications/dp/12335/tax-audits-as-scarecrows-evidence-from-a-large-scale-field-experiment
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
eu_rights_str_mv openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv IZA - Institute of Labor Economics
publisher.none.fl_str_mv IZA - Institute of Labor Economics
dc.source.none.fl_str_mv reponame:CONICET Digital (CONICET)
instname:Consejo Nacional de Investigaciones Científicas y Técnicas
reponame_str CONICET Digital (CONICET)
collection CONICET Digital (CONICET)
instname_str Consejo Nacional de Investigaciones Científicas y Técnicas
repository.name.fl_str_mv CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas
repository.mail.fl_str_mv dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar
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