Eric Rasmusen’s Weblog

A proposed Wisconsin law of a few years ago would have resulted in the names of delinquent taxpayers being posted on the Net. This is a good example of my argument in my stigma article that one function of punishment is publicity. This function has relatively low cost, and has a direct beneficial effect on efficiency. Here’s the Wisconsin story:

Before it’s over, thousands of those who owe state taxes could have their names publicized to friends, customers and creditors.

“It’s a method of shaming people,” said the bill’s chief sponsor, Rep. Frank Lasee (R- Bellevue).

He first proposed having the now-secret names of the top 100 delinquent taxpayers posted on the Internet, but is now pushing to post the names of the 7,000 individuals and businesses who owe more than $25,000 in back taxes, penalties and interest.

“It’s just another tool to help our state collect dollars from delinquents,” said Lasee, noting the state spent much of the year eliminating a $3.2 billion budget deficit. “I don’t see why we wouldn’t want to do this.”

Why, then, not post the names of everybody who owes taxes, not just those who owe over $25,000? Nonetheless, this is a good idea.

Here are the stories of Louisiana, Illinois, and New Jersey.

Officials in other states say Internet “shaming” has been a tremendous success.

In Louisiana, the worst delinquent taxpayers are notified in writing that the next step for them is CyberShame, which started in January 2001.

“Lots of them pay up. Lots of them make arrangements” to start paying, once they receive the notification, said Louisiana Revenue Department spokesman Danny Brown.

Louisiana revenue agents identified $400,000 that delinquent taxpayers paid “just to keep themselves off the (Internet) list,” Brown said.

“Some of them contact us saying, ‘I need to pay up to make sure I don’t get on that list,’ ” Brown added.

“We’re talking about the worst of the worst here. They just flat out owe us the money and won’t pay it. . . . Embarrassing them is about the best way to get them to pay, believe it or not.”

Sarah Kaufman of Connecticut’s taxing agency said friends, neighbors and co-workers who have seen the Internet list sometimes call state officials, telling them where a certain scofflaw now lives or works.

“We’ve had people turn people in,” Kaufman said. The worst 100 offenders in Connecticut owe $25.4 million in unpaid taxes.

Before Illinois had to take down its Internet list of 2,000 delinquents because of its budget crisis, it had prompted a Chicago Board of Trade executive and several prominent stockbrokers to pay their outstanding state taxes, said Illinois Revenue Department spokesman Mike Klemens.

Klemens said Illinois considered its Internet postings to be a success, but he warned Wisconsin that it takes a lot of time double-checking names and tax status to make sure the list is accurate.

New Jersey doesn’t post its list of 400 biggest business and individual delinquents until a judge formally enters a judgment against the taxpayer, a state official said.

This entry was posted on Sunday, January 28th, 2007 at 8:39 pm and is filed under ResearchOld, Law, Social Reg. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.