From the Washington Post:
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.
Thaler is one of the leading advocates of “libertarian paternalism,” which Will Wilkinson roundly pummeled the other day.
So is withholding more money from people’s paychecks in order to make the poor dumb sheep think they’re getting money back 16 months later an example of libertarian paternalism? No, it’s just old‐fashioned sheep shearing.