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Deterring Property Tax Delinquency in Philadelphia: An Experimental Evaluation of Nudge Strategies

Michael Chirico, Robert Inman, Charles Loeffler, John MacDonald, Holger Sieg

NBER Working Paper No. 23243
Issued in March 2017, Revised in June 2019
NBER Program(s):The Public Economics Program

Municipal governments commonly confront the problem of tardy or delinquent property tax payments. We implement an experiment in property tax collection for tardy taxpayers in the City of Philadelphia for the calendar year, 2015. The experiment sent one of seven reminder letters to the tardy taxpayers, testing the efficacy of a simple reminder, two alternative reminders stressing economic sanctions, and four alternative reminders emphasizing either that taxpayers receive neighborhood services or city-wide services for their tax payments, that most of their neighbors pay their taxes on time, or that as a citizen in a democracy it is a civic duty to pay taxes on time. Compliance behaviors were compared to a holdout sample that received no reminder letter. The most effective letters were those that threatened an economic sanction for continued non-compliance. These letters were particularly cost-effective in raising additional city revenues. There was no evidence that those receiving a reminder for the calendar year 2015 improved their tax compliance behavior in the calendar year 2016.

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Document Object Identifier (DOI): 10.3386/w23243

Published: Michael Chirico & Robert Inman & Charles Loeffler & John MacDonald & Holger Sieg, 2019. "Deterring Property Tax Delinquency in Philadelphia: An Experimental Evaluation of Nudge Strategies," National Tax Journal, vol 72(3), pages 479-506.

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