The Tax Man Nudgeth (Ep. 121)
Our latest Freakonomics Radio on Marketplace podcast is called “The Tax Man Nudgeth.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript.)
The U.S. tax code is almost universally seen as onerous and overly complicated. There is always talk in Washington about serious reform — Michigan Reps. Dave Camp (R.) and Sander Levin (D.) are currently working on it — but, Washington being Washington, we probably shouldn’t hold our breath.
So in this podcast we decided to take a look at the tax code we’re stuck with for now and see if there are some improvements, however marginal, that are worth thinking about. We start by discussing the “tax gap,” the huge portion of taxes that simply go uncollected for a variety of reasons. We once wrote about a clever man who helped close the gap a bit. In this episode, former White House economist Austan Goolsbee tells us why the government doesn’t try too hard to collect tax on all the cash that sloshes around the economy.
You’ll also hear from Dan Ariely, who has an idea for turning the act of paying taxes into a somewhat more satisfying civic duty.
And we learn how a tiny British Government unit, the Behavioral Insights Team, is using the latest academic findings in behavioral economics and psychology to nudge British taxpayers toward compliance. The B.I.T. is informally called the “Nudge Unit,” after the excellent book Nudge by Richard Thaler and Cass Sunstein. Thaler regularly consults for the unit; Sunstein, who recently exited government service here in the U.S., has just written a related book called Simpler: The Future of Government.
In the podcast, you’ll hear from the Nudge Unit’s director, David Halpern, a noted social scientist himself and the author of an excellent book called The Hidden Wealth of Nations. While the Marketplace segment only had room for a couple of clips of our Halpern interview, this podcast includes an extended cut of him talking about a number of other, non-tax measures. I hope you find it as interesting as I did.