Does Shaming Pay? Evaluating California's Top 500 Tax Delinquent Publication Program

Abstract

Many U.S. states and countries around the world publicly disclose tax debtors to encourage compliance. Little is known about the effectiveness of these programs. Using administrative tax microdata from California’s “Top 500” disclosure program, we study whether notices of imminent publication affect payment and other compliance outcomes, as well as whether these notices affect subsequent reported earnings. We estimate the direct effect of the letter sent to the 500 highest-balance, publication-eligible taxpayers to be additional revenue of between $2.8 and $7.2 million annually, with no evidence of an impact on subsequent reported earnings. We also estimate an upper bound on the deadweight loss caused by publication of non-compliers, and conclude that the program generates positive net social welfare. Together, these results suggest that delinquent taxpayer disclosure can be an efficient tax enforcement tool, at least among the relatively high-income population we study.