Non-Monetary Sanctions as Tax Enforcement Tools: Evaluating California’s Top 500 Program

Journal of Policy Analysis & Management

80 Pages Posted: 27 Oct 2021 Last revised: 31 Jan 2024

See all articles by Chad Angaretis

Chad Angaretis

affiliation not provided to SSRN

Brian D. Galle

Georgetown University Law Center

Paul R. Organ

University of Michigan at Ann Arbor

Allen C. Prohofsky

California Franchise Tax Board

Date Written: January 30, 2024

Abstract

Many U.S. states and countries around the world use non-monetary sanctions to encourage tax compliance, including public disclosure, license suspension, and withholding of other government-provided benefits or privileges. Little is known about the effectiveness of these programs. Using administrative tax microdata from California’s “Top 500” program, we study whether notices warning of the imminent publication of a taxpayer’s personal information and potential license suspension affect payment and other compliance outcomes, as well as whether these notices affect subsequent reported earnings. Exploiting variation over time in the cutoff balance for program eligibility we find evidence of strong positive compliance responses to the program, with no evidence of an impact on subsequent reported earnings. We also develop estimates of the deadweight loss caused by publication of non-compliers, and conclude that the program generates positive net social welfare. Together, these results suggest that non-monetary sanctions can be efficient tax enforcement tools, at least among the relatively high-income population we study.

Keywords: tax enforcement, compliance, shaming, disclosure, tax collection, nonmonetary sanctions, tax avoidance, state income taxation

JEL Classification: H24, H26, H31, H71

Suggested Citation

Angaretis, Chad and Galle, Brian D. and Organ, Paul and Prohofsky, Allen C., Non-Monetary Sanctions as Tax Enforcement Tools: Evaluating California’s Top 500 Program (January 30, 2024). Journal of Policy Analysis & Management, Available at SSRN: https://ssrn.com/abstract=3950490 or http://dx.doi.org/10.2139/ssrn.3950490

Chad Angaretis

affiliation not provided to SSRN

Brian D. Galle (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Paul Organ

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Allen C. Prohofsky

California Franchise Tax Board ( email )

Sacramento, CA 95827
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
172
Abstract Views
1,043
Rank
314,422
PlumX Metrics