Fraud and the Dividend Laser Talk

The Treasury Department is well-equipped to identify and prosecute income tax fraud, though probably a better proxy for CCL’s policy is Alaska’s Permanent Fund Dividend (PFD), which pays royalties to Alaskan residents from the oil production revenues generated in the state. The PFD provides a useful model for how to prevent fraud1, and estimate how much might be expected:

  1. The PFD enacts strict penalties for a fraud conviction.
  2. The PFD encourages and incentivizes citizens to report known instances of fraud.
  3. Encouragingly, the PFD shows how relatively low the fraud numbers are: in 2012 less than $100k was prosecuted out of a total $567M dividend payout, representing less than 0.02% lost to fraud. Even if only 10% of all actual fraud was prosecuted, that number still remains a very minor 0.2%2.

The lesson is clear: existing American systems demonstrate the dividend can be administered virtually fraud-free.

1. Fraud, Permanent Fund Dividend Division, Alaska Department of Revenue.

2. “2012 Alaska Permanent Fund dividend payout: $878”, Alaska Dispatch News, September, 18 2012.