TAXES AND OTHER REVENUES.

• Position: "Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota" - Brief Article

"Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota"

Blumenthal, Marsha; Christian, Charles; and Slemrod, Joel

National Tax Journal, March 2001, pp. 125-133.

A fundamental problem for governments today is how to enforce a tax system in which citizens determine, in part, their own liabilities. Given limited monetary resources, governments must decide between aggressive taxpayer enforcement and more friendly interactions with taxpayers to resolve this issue. In 1994 and 1995, the Minnesota Department of Revenue designed and conducted an experiment to measure the effect on compliance of three alternative tax enforcement strategies: 1) normative appeals to conscience, 2) advanced notice of an increased audit rate, and 3) enhanced taxpayer services. This article examines findings related to the normative appeals strategy. The impact of the experimental treatment on voluntary compliance was measured by comparing changes between 1993 and 1994 income reported for two groups of taxpayers, a treated group versus a control group of taxpayers. At the beginning of the 1994 tax year filing season (January 1995), two groups of 20,000 taxpayers each received one of the treatment letters. Twenty-thousand additional people received no letter and served as the control group. Both letters...