Tax Compliance Is Easier When Everyone Gets A Refund

Well, this is one way to improve compliance. I should point out that it’s not, not, NOT a way that I would like to see, of course:

Other experts are considering more creative ways to improve tax compliance. One idea is to take advantage of people’s desire to get a refund at the end of the year.

“What some people do when they are doing their taxes is they do a first draft and see how much they are getting back,” said Richard Thaler, a University of Chicago economist who studies how people think about money. “If they owe money, then they do a second draft. They keep finding deductions until the refund is positive.”

Thaler said mandatorily increasing withholding levels so more people get refunds could increase compliance because taxpayers would no longer have to go to great lengths to get a refund.

I think that quite possibly the most insidious thing the government has ever done is to create the withholding nightmare. How in the world did we allow them to make tax day a happy occurrence for most Americans?

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  • http://nothirdsolution.com David Z

    “I think that quite possibly the most insidious thing the government has ever done is to create the withholding nightmare”

    Milton Friedman regrets what it has become.