Place of Origin
BA in Economics
Universidad de la Republica
Entered program in 2017
Tax Bunching at the Kink in the Presence of Low Capacity of Enforcement: Evidence From Uruguay, with Marcelo Bergolo, Gabriel Burdin, Mauricio de Rosa and Martın Leites, 2019, IZA DP No. 12286.
By using a bunching design on rich administrative tax records from Uruguay’s tax agency, we explore how individual taxpayers respond to personal income taxation in a context with high sheltering opportunities. We estimate a moderated elasticity of taxable income in the first kink point (0.16) driven by a combination of gross labor income and deductions responses. Taxpayers use personal deductions more intensively close to the kink point and undereport income unilaterally or through employer-employee collusion. Our results suggest that policy efforts should be directed at broadening the tax base and improving the enforcement capacities rather than eroding tax progressivity.
Tax Audits as Scarecrows: Evidence from a large field experiment, with Marcelo Bergolo, Rodrigo Ceni, Guillermo Cruces and Ricardo Perez-Truglia, NBER Working Paper No. 23631
According to the canonical model of Allingham and Sandmo (1972), firms evade taxes by making a trade-off between a lower tax burden and higher expected penalties. However, there is still no consensus about whether real-world firms operate in this rational way. We conducted a large-scale field experiment, sending letters to over 20,000 firms that collectively pay over 200 million dollars in taxes per year. In our letters, we provided firms with exogenous but nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measure 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, according to administrative data. We find that firms do increase their tax compliance in response to information about audits. However, the patterns in these responses are inconsistent with utility maximization. The evidence suggests that, much like scarecrows frighten off birds, audits can be a significant deterrent for tax evaders even though they would be perceived as harmless by a rational optimizer.
Misperceptions about Tax Audits, with Marcelo Bergolo, Rodrigo Ceni, Guillermo Cruces, and Ricardo Perez-Truglia. 2018. AEA Papers and Proceedings, 108 : 83-87.
For some entities, the utility-maximizing evasion rate depends substantially on tax audit features, such as audit probabilities and penalty rates. Bergolo et al. (2017) document large misperceptions about these features. In this paper, we expand the analysis of survey data to explore potential sources of these misperceptions. Of all the channels that we explore, recent contact with audits best explains differences in misperceptions.