Transparent Tax Return

From Weekly I/O#76

In Norway, you can see everyone's tax returns and who has checked yours, which might widen the happiness gap between the rich and poor.

Article: In Norway you can see everyone's tax returns. There's a catch though

In 2001, Norwegian tax records became easily accessible online, allowing citizens to view each other's income. Likewise, in Sweden and Finland, one can access anyone's tax details with just a phone call.

Because you can search everyone's tax records online, Norwegian started developing Facebook apps that showed all your friends' income. To address privacy concerns, the government later added a twist to the policy that everyone can see who has looked at their returns (which sounds like LinkedIn's profile-viewing feature, huh).

Interestingly, a study by UCLA economics professor Ricardo Perez-Truglia suggests that Norway's transparency in tax records may have widened the happiness gap between the rich and poor by 29% and the life satisfaction gap by 21%. In other words, this makes the wealthy happier and the poor less happy (though Norway still ranks as the world's 7th happiest country).

76 tax transparent happiness

From the paper The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment by Ricardo Perez-Truglia

Ricardo Perez-Truglia also poses another intriguing, yet unverified question:

“One reason why people buy really expensive boots and clothing and things like that is because they want to show off, they want to signal that they’re rich. But in Norway, when the public knows who’s rich and who’s not, what’s the point of buying these types of goods?”

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