Author(s)

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

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Abstract

Property taxes play a central role in the financing of municipal government services. Yet, municipal governments commonly confront problems with property tax collection even when the tax base is known. There is surprisingly little evidence on what authorities can do to increase property tax compliance. This paper analyzes seven different property tax notification strategies through a randomized controlled experiment conducted with the City of Philadelphia. All seven notification strategies increase property tax compliance over the usual approach of simply sending a bill. The most effective notifications are the those that threaten to take out a lien on the property or to foreclose by sheriff's sale for continued failure to pay taxes. The results suggest that economic motives to pay property taxes are more effective than those that appeal to social norms.