Freakonomics Radio 400. How to Hate Taxes a Little Bit Less
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Dec 12, 2019 
Kate Lamberton, a marketing professor at Wharton, and Jesper Kohl, an economist with a knack for Japanese politics, dive into the complexities of tax compliance. They explore innovative ideas, like allowing taxpayers to choose how their contributions are allocated, surprisingly boosting compliance rates. Their conversation highlights Japan's unique hometown tax system and its implications for local economies. The duo also challenges traditional views on altruism and tax giving, questioning how the psychology of donation can reshape taxpayer engagement.
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Voluntary Government Donations
- Economist Catherine Echol ran an experiment where people donated money.
- Surprisingly, people voluntarily gave money to the government when they supported its cause, like disaster relief.
Tax Gap vs. Charity
- The US tax gap, the difference between owed and paid taxes, is huge, almost half a trillion dollars annually.
- This is only slightly more than the amount Americans donate to charities yearly.
Tax Compliance and Employment Type
- Tax compliance is high (99%) for employees whose taxes are withheld automatically.
- Self-employed individuals, lacking third-party reporting, show much lower compliance (under 40%).