Column Finance and the Social Security System 2011.03.08
The US states have irregularly implemented tax collection campaigns called "Tax Amnesty" and have created good results. "Tax Amnesty" is the system that tax delinquents and tax evaders pay tax which they haven't paid in the past within a "Tax Amnesty" period (ordinarily 2-3 months) and the state's tax agency give a tax break to absolve all or part of penalty, fine and delinquency charge. US citizens don't know when a "Tax Amnesty" starts; they can't evade delinquent tax in advance.
Since Arizona State implemented "Tax Amnesty" in November 1982, 48 states have implemented 110 times to date. The Louisiana States and the New York State have implemented 5 times. In 2010, many states implemented the "Tax Amnesty" and this is possibly due to it's because of the world recession. For example, in January, New York State. In April, Massachusetts State and Pennsylvania State. In June, New Mexico state. In July, Florida State and Nevada State. In August, District of Columbia. In September, Kansas State and Louisiana State. In October, Illinois State. The amount of tax collection was 303.7 million dollars in Louisiana, 261 million dollars in Pennsylvania and 20.8 million dollars in Washington D.C.
Data of tax collection was published through "Tax Amnesty" but Costs were not published. Therefore I interviewed tax agency staff of six states who implemented the "Tax Amnesty" in 2002 about "Tax Amnesty" costs to because I realized the cost-benefit ratio of "Tax Amnesty". I realized the cost-benefit ratio was considerable (Table 1). South Carolina State targeted 127,500 people (equivalent to 450000 accounts) and collected 66.2 million dollars whereas costs were 1.8 million dollars. Massachusetts State collected 134 million dollar and Costs were 1.5 million dollars including advertising costs. Maryland State collected 40 million dollars while the amount of tax delinquency was 260 million dollars (300,000 people). Therefore the percentage of tax collection was 15.38%. The cost was two million dollars. The breakdown was: advertising costs one million dollars included temporary workers' wages 400,000 dollars. Connecticut State collected 95 million dollars; costs were one million dollars. Missouri State collected 73 million dollars. Costs were mailing costs to tax delinquents 96,000 dollars, programming costs 242,000 dollars. Kentucky State collected 44 million dollars. Combination Salary, technical costs and advertising costs were three million dollars and IT costs were 950,000 dollars.
South Carolina | Massachusettes | Maryland | Connecticut | Missouri | Kentucky | |
---|---|---|---|---|---|---|
Collections | 66.2 | 134 | 40 | 95 | 73 | 44 |
Costs | 1.8 | 1.5 | 3.4 | 1 | 0.35 | 4 |
Cost-benefit | 36.8 | 89.3 | 11.8 | 95 | 208.6 | 11 |
Reference
Guy Dinmore ' Italy tax amnesty yields record €80bn', Financial Times , 23 December 2009 http://www.ft.com/cms/s/0/35dfa00a-efd9-11de-833d-00144feab49a.html#axzz1EeLxYBqr (accessed February 22 2011)