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
- Institución
- Consejo Nacional de Investigaciones Científicas y Técnicas
- OAI Identificador
- oai:ri.conicet.gov.ar:11336/119855
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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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13.070432 |