Emeric Henry discussion of: Nudges and threats

The ability of the state to collect taxes relies on two key behaviours of taxpayers. First, at the reporting stage, taxpayers need to truthfully report their income. This has been the focus of most of the literature on tax compliance. Second, at the payment phase, a second type of misbehaviour can occur: the choice by the taxpayer not to pay the debt. Delinquent tax payment is the focus of this paper.Many different policies can be put in place to decrease delinquency in tax payments. Their respective efficacy depends on the motives driving taxpayers’ misbehaviour. Policies that rely on penalties and sanctions target extrinsic motivations. Other policies focus on intrinsic motivations, such as image concerns driven, for instance, by social comparisons. Finally, delinquency can be explained by behavioural biases and can be addressed using nudges.The strength of the paper is to evaluate all these policies in a unified framework exploiting the behaviour of similar individuals. The authors first analyse standard enforcement policies, exploiting a discontinuity based on the level of debt. Debts exceeding SEK 2000 (approximately 200€) are handed over to the Enforcement Agency, with strong legal and practical implications. This paper shows, with a nice identification strategy, that the threat of this sanction raises the likelihood of payment by 9 percentage points, from a baseline of 58%, while actual enforcement raises it by an additional 19 percentage points.