Saturday, October 24, 2009

Income transparency and nudging on payment of taxes

One of the most effective nudges to get people to pay taxes (of all kinds) is to make public and disseminate widely their annual incomes, tax assessments, and their actual tax payments.

In this context, Norway shows the way, by becoming the first country to make public the official records - "skatteliste" or "tax list" for 2008 - showing the annual income, overall wealth, and tax assessment of nearly every taxpayer in the Scandinavian country. While Norway may not have a major problem with tax evasion and the tax list may be aimed at increasing transparency, such public disclosures may be more effective in countries like India, where tax (income, corporate, property and other local taxes) evasion and payment default is rampant.

Update 1 (12/3/2010)
See this on the impact of shaming campaigns acrosz US to nudge people into paying their taxes.

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