New York Times op-ed: Shaming Those Who Skip Out on Taxes, by Ricardo Perez-Truglia (Harvard) & Ugo Troiana (Michigan):
In 2006, according to an estimate by the United States Treasury Department, Americans underpaid their taxes by about $450 billion. For that year, that’s roughly equal to Pentagon spending, and more than the gross domestic products of Sweden and Switzerland.
A good chunk of the missing tax revenues comes from underreporting income, or tax evasion. The rest, roughly 25 percent — about $110 billion — comes from failure to pay taxes, or tax delinquency.
Some people are hard up and can’t afford to pay their taxes. But others simply choose not to pay. When traditional enforcement strategies, like charging above-market interest rates on the debt, don’t work, the government uses a number of tools to collect these taxes. For instance, some states, like Kentucky, can order employers to take a bigger tax bite from the wages of tax delinquents, as allowed by federal and state law.
But traditional collection methods don’t always work. In a recent study [Tax Debt Enforcement: Theory and Evidence from a Field Experiment in the United States], we used another strategy that got results: publicly shaming tax delinquents. It should be a key part of government efforts to increase the collection of tax debts, and thanks to the Internet and social media, the government has the means to make it even more effective.
Public shaming is already used throughout the world to collect taxes. The city of Bangalore, India, hires drummers as tax collectors to visit the homes of tax evaders and to literally bang the drum if they don’t pay. In England, Her Majesty’s Revenue and Customs publishes details of deliberate tax defaulters. Argentine local governments are also adopting shaming lists.
They are also used to a limited extent in the United States. Nearly two dozen states — among them California, Massachusetts and New York — publish online lists on state websites revealing the identities of tax delinquents.
But many people worry that the publication of the lists could backfire by insulting individuals who are in temporary financial hardship, making them less likely to pay once they are back on their feet. Or the shaming could alienate delinquents from future sources of income that could have been used to pay up. ...
We believe that shaming policies are an effective tool and should be part of the effort to make citizens pay their fair share. More effective and fair tax collection will fund the infrastructure, research and education that pave the way for economic growth and opportunity.