Abstract: Why do some individuals evade taxes while others do not? We study this question using administrative tax records from Uruguay linked to a tailored survey of taxpayers. Using third-party reports, we measure individual income under-reporting as an indicator of evasion. We then examine how three factors predict who evades: social preferences (e.g., honesty measured through incentivized laboratory games), peers (e.g., the behavior of current and former coworkers), and economic factors (e.g., the marginal tax rate). We find that social preferences have little power to predict evasion, while economic factors matter more and peer behavior is the strongest predictor.
Abstract: Do top-income individuals support different levels of redistribution compared to the rest of society? If so, what drives these differences? We address these questions using a novel dataset that combines administrative tax records with unique survey data on the social and economic preferences of workers in Uruguay. We document a marked decline in support for redistribution among the Top 1% of the income distribution. Comparing this group with the Top 50-2%, we show that differences in support for redistribution are not solely explained by current income or demographics. A set of beliefs, perceptions, and views, including political ideology, meritocratic beliefs, and views on government, account for much of the observed differences. Instead, a set of behavioral traits and social preferences, such as altruism and risk aversion, measured through incentivized online games, contribute little to explaining the gap. Finally, the differences in support for redistribution persist even when comparing the Top 1% with other high-income groups. Together, these findings suggest that the Top 1% is a distinct group with preferences for redistribution that differ from the rest of society, even from other high-income groups.
Presented at: 2022 IIPF, 2025 ECINEQ conference.
Coverage from La Diaria, Canal 5, TV Ciudad, Radio Sarandi
(with Sarah Robinson and Alisa Tazhitdinova)
Abstract: We study how U.S. state personal and corporate income taxes have affected pre-tax income inequality (income shares and top incomes) during the last century. The long panel nature of our data, from 1917 to 2018, allows us to study the effect of tax adoptions, tax cancellations, and tax changes, and to assess both immediate and long-term relationships. With event study and synthetic control designs, we generally find no statistically significant relationship between tax measures and inequality. Some of our point estimates, and also two-way fixed effects analysis, suggest that higher income taxes may reduce top incomes and income shares.
Presented at: 2023 All-California Labor Economics Conference, 2023 NTA meetings, 2025 RIDGE forum, 2025 ECINEQ conference, Fall 2026 NBER Economic Analysis of Business Taxation, and Claremont McKenna AERG.
Abstract: We study the pass-through and distributional incidence of Value Added Tax (VAT) exemptions on food in a lower-income setting with very high informality. Exploiting the unanticipated removal of VAT on selected food items, we combine detailed administrative data, a monthly census of supermarket prices, web-scraped online prices, and a nationally representative monthly phone survey panel. Using a difference-in-differences design, we estimate pass-through by comparing price changes for exempt and non-exempt items, and we measure incidence using household-level data on prices, quantities, and place of purchase. We find near-complete pass-through in formal supermarkets in central urban areas, but limited price reductions elsewhere in the country. Spatial heterogeneity in pass-through is strongly associated with local retail competition. In terms of incidence, VAT exemptions are highly regressive: for every dollar of foregone revenue, only five cents accrue to the poorest quintile. This is because poorer households are less likely to purchase from formal stores in urban areas, rely more on subsistence farming, and consume fewer food items overall. We compare these outcomes to predictions from 237 economists and show that experts systematically misjudge pass-through and substantially overestimate the benefits for poorer households. Taken together, our findings highlight how informality, competition, and demand elasticity shape the pass-through and incidence of food tax exemptions, raising serious concerns about their effectiveness as a poverty alleviation tool.
Presented at: