Should tax returns be made public?
Forget about Donald Trump’s tax returns. I want to know how much my neighbors earned and how much they paid in taxes.
Scratch that. I have wonderful neighbors, most of whom have lived in my neighborhood longer than my wife and I have.
It’s the people who live a few miles away I wonder about. It’s the people who run our local governments. How much did they earn last year and what did they pay?
I’m kidding, sort of. But underlying the struggles, the political name-calling and the demands for tax transparency from the nation’s top political leaders is a larger question we ought to consider.
Why isn’t everybody’s tax return public? As it was less than 100 years ago.
When it comes to President Trump, his enemies want to know his actual earnings and how low he was able to finagle his actual tax obligation. Their demand is grounded in a somewhat reasonable assumption that transparency (and perhaps embarrassment) is a great weapon against corruption and privilege.
But if it would work at the highest level of government, why not everywhere?
Many people are phobic about letting others see their tax information. Perhaps they should be.
Insurance companies could use your tax information. They already use income levels of residents in poor zip codes to charge higher premiums. If insurers had data on everyone’s exact level of income, that kinds of discrimination might become your problem.
Consider your medical privacy, which is not always as separate from your financial privacy as you might think. Let’s say you have medical expenses high enough that they are deductible against taxable income. All of a sudden, the whole world would know that you are sick, and how much you were spending to get better. Some medical providers might even end up deciding to charge you more.
What if your tax-deductible charitable contributions would become public information as well, including which religious institutions you gave to. Many people give money to charities, anonymously to avoid being deluged with requests for money and fawning sycophants. Making it harder to donate anonymously would result in fewer charitable contributions.
Those all seem like unacceptable privacy violations to me, especially in an era where privacy concerns seem to be growing.
On the other hand if Americans all knew one another’s tax bill, they might be motivated to fill out their taxes correctly. Disclosure would be an automatic enforcement device.
My guess is that if you asked Americans if their income taxes should be public information, the answers would mostly run the spectrum from “absolutely not” to “hell, no.” But the idea that tax returns should be confidential and not subject to disclosure was not a specific part of US law until 1976. At earlier periods of US history, tax returns were sometimes published in newspapers or posted in public places.
But no, a little more sunlight is not always good thing. The U.S. has one of the most complicated tax systems in the world, requiring an exceptional degree of disclosure of personal information. For that reason, publicly available tax information would do more to violate privacy.