Tax Avoidance in Buenos Aires: The Case of Ingresos Brutos

CID Research Fellow & Graduate Student Working Paper No. 117

Carolina Ines Pan
September 2019

This study presents evidence of tax avoidance in Buenos Aires, Argentina. I exploit a break in the tax scheme of the most controversial tax, Ingresos Brutos (gross income), between the city and the greater area, which are otherwise identical law and regulation-wise for the studied population. When possible, workers would rather travel longer distances to their jobs than face the tax burden. Given that this type of avoidance is costly, results suggest that Ingresos Brutos might be acting as a binding constraint to growth for businesses.

Keywords: Taxes, Tax Avoidance, Gross Income, Binding Constraints
JEL Classification: H2, K2
Affiliated Research Program: Growth Lab