From my AEI colleague Stan Veuger’s latest op-ed.
Government, as the line attributed to former Rep. Barney Frank goes, is simply the name we give to the things we choose to do together. This “choosing” the good congressman refers to, of course, often involves threatening to throw people into prison, telling them what to smoke or when to procreate, and using your monopoly on violence to force people to give up a significant chunk of their hard-earned money.
The latter becomes a necessity because even the people who agree on the government’s role do not necessarily want to pay for it. Even if they think there are more things the government should do, they’d still rather someone else pick up the tab. Even if you put some of them in charge of writing tax law or collecting taxes, that’s probably still how they’d feel.
How then are we going to make them pay for the stuff we’ve somewhat awkwardly settled upon having the public sector do? Well, we send them a bill. Perhaps we follow up if they don’t pay promptly. Many tax authorities fine people, or make them pay interest on their debt. You can suspend their driver’s licenses or seize their assets. But what if they don’t have any? You can send them to prison, but that doesn’t fund the government, that just forces you to waste more resources on the tax delinquents.
One alternative is the central focus of a new study by economists Ricardo Pérez-Truglia of Microsoft Research and Ugo Troiano of the University of Michigan: publicly shaming delinquent taxpayers into paying up. (Pérez–Truglia and Troiano’s interest in tax avoidance, tax evasion and tax debts has nothing to do with the fact that they are Argentinian and Italian, of course.) Connecticut started deploying this method in 1995, and almost half of the states have followed suit since by publicizing the names of delinquent taxpayers. California, for example, publishes a list of the 500 taxpayers who owe the state the largest amounts of money. Georgia maintains a publicly accessible database that allows you to find anyone who owes back taxes.
The idea is that once people realize that their friends and neighbors may see that they are not paying their taxes, they feel embarrassed and pay up. What these endeavors attempt to do is to replicate and scale up the sense of community that facilitates resolving collective action problems at the local level.