Charles Kenny wants “to enlist American citizens to help audit some of the most consistent tax cheats: retail businesses”:
In the State of Sao Paulo in Brazil, customers who ask for a receipt can give their social security number to the cashier. Businesses have to submit their copy of those receipts—with or without social security numbers—to the tax authority. The authority creates an account for every social security number entered into the system and reports to customers which receipts have been entered with their social security number and how much they are for. Customers receive a rebate worth about 30 percent of their share of sales taxes paid through the business each month, and for every $50 of receipts they are entered into a lottery with a maximum payout of $500,000. They can complain online if they think receipts are missing or have the wrong price.
Joana Naritomi, a Harvard economist, studied the impact of the Sao Paulo experiment, which has been running since 2007. She found 13 million consumers enrolled in the receipts database at the end of 2011. The system registered more than 1 million complaints involving about 13 percent of the 1 million retail and wholesale establishments in the region. Most important, Naritomi finds that the program increased the reported revenues of retail firms by 22 percent over four years. She shows that reported revenues went up not because real revenues increased, but because reporting became more honest. The result was an additional $2 billion in tax payments. The system paid out $1.6 billion in rewards to consumers over that time, translating into a $400 million increase in net income for the region.
The Dish 