Tax audits as scarecrows: evidence from a large-scale field experiment

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...

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Veröffentlicht in:	American economic journal. Economic policy 2023-02, Vol.15 (1), p.110-153
1. Verfasser:	Bergolo, Marcelo
Format:	Artikel
Sprache:	eng
Schlagworte:	2012-2016 Außenprüfung Feldforschung KMU Steuervermeidung Uruguay
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creator	Bergolo, Marcelo
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 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 C93, D22, H25, H26, K34, L25, O14)
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subjects	2012-2016 Außenprüfung Feldforschung KMU Steuervermeidung Uruguay
title	Tax audits as scarecrows: evidence from a large-scale field experiment
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