"Secondly, it’s possible that people who have smaller debts are different kinds of people than those who have higher debts, and who may not be responsive to shame. They may respond differently," he said.
Vermont Rep. Janet Ancel, the Democratic chairwoman of the House Ways and Means Committee, was instrumental in passing the legislation. "Our challenge, which every state shares, is in compliance and collections. We felt it was worth a try," she said. "It helped maybe a little bit that I'm a former tax commissioner and I appreciate how difficult it is to get people to pay what they owe. It turns out it's been quite successful."
Ancel said there was little resistance to the program when the legislature had hearings on it, and she doesn’t remember questions being raised about privacy. Initially, the list did not include the amount each delinquent taxpayer owed. But under pressure from the public and other lawmakers, the amounts were added to the list.
Vermont Rep. Janet Ancel
She said other legislatures considering similar bills should make sure the tax departments are careful about what they publish. "If you are going to make this information public, it needs to be correct. It takes time and attention from the department," she said. "I think it's a good collection tool. It’s one tool, but it’s a fairly significant one."
California Collects
California was one of the first states to publish the names of delinquent taxpayers online, starting in 2007. Since then, the program has collected more than $414 million from taxpayers in arrears, according to Daniel Tahara, spokesman for the California Franchise Tax Board.
People and businesses pay because they "do not want their name published on a delinquent tax list that is publicly available," Tahara said, adding that publishing the names is not the only tool state officials have. Other motivators include suspending driver’s licenses and other professional licenses for those who don't pay, and working with other states on reciprocal agreements that can allow California access to taxpayer refunds from other states.
Jerome Horton, chairman of the California Board of Equalization, another tax administration entity, is a former state legislator who authored the state’s original "tax shaming" bill.
"It was a 'scarlet letter' kind of concept," Horton said. "We wanted to know why they weren't paying. This was a catalyst to figure out a way to do that."
He said the state was pleasantly surprised to find that "if we educate folks about their responsibilities, most people will actually comply." He acknowledged however, that some people aren’t thrilled about the exposure.
"Under public pressure, they accuse us of violating their privacy and a whole bunch of things," he said. Some of the delinquents threaten to sue the state for invading their privacy, "but as soon as they talk to a lawyer they find out it's not a violation of their privacy to publish that they owe us taxes. Then they call me and scream at me."
In most of the states, once a taxpayer pays the money, his or her name comes off the list and another taxpayer is put on, creating a . In California, the list of the top 500 (half individuals and half businesses) is published twice a year. According rotating file of scofflawsto the Franchise Tax Board, 41 percent of those who were about to appear on the list made payment arrangements before their names were published, accounting for 205 individuals or businesses.
Matthew Gardner, executive director of the Institute on Taxation and Economic Policy, a left-leaning think tank, said that while making tax delinquents' names public may work, a larger question is whether that technique is being used because state tax collection departments are underfunded and under-staffed, making regular collections more difficult.
"A better strategy would be that state agencies have the ability to fairly and efficiently collect taxes in the first place," he said.
Editor's Notes:
We've provided some of the state's listing of delinquent taxpayers:
California: https://www.ftb.ca.gov/aboutFTB/Delinquent_Taxpayers.shtml
Vermont: http://www.state.vt.us/tax/delinquenttaxpayers.shtml
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