Using the “Smart Return” to Reduce Tax Evasion

Details

Author(s):
Publish Date:
March 14, 2015
Publication Title:
Stanford Public Law Working Paper
Format:
Working Paper
Citation(s):
  • Joseph Bankman, Clifford Nass, and Joel Slemrod, Using the "Smart Return" to Reduce Tax Evasion, Stanford Public Law Working Paper, No. 2578432 (March 14, 2015).

Abstract

Tax evasion costs government over 400 billion dollars a year. We suggest enforcement efforts can be strengthened by redesigning the tax return to take advantage of social psychology research, and industry experience with data-driven systems. To illustrate the potential of this approach, in this paper we propose three categories of changes that merit testing through pilot studies. The first involves changing the wording on existing returns to increase the psychological cost of evasion and increase the perceived expectation of detection. The second builds appeals to morality in the return itself through the use of a short phrase containing a “self-relevant” noun. The third uses on-line “conversational agents” to ask adaptive questions.