Why the secrecy? Public disclosure of taxes not a new idea | AccountingWEB

Why the secrecy? Public disclosure of taxes not a new idea

Andy Rooney recently brought up the issue of public disclosure of taxes on 60 Minutes after paying the highest taxes of his life. He championed the cause, saying he would show his if everyone else showed theirs in an attempt to expose tax cheaters.

The IRS cannot release any of the personal data contained in a tax return or share the information with most other federal agencies, according to an article on taxanalysts.com. But this secrecy about who pays what has not always been the American way.

Lawmakers during the Civil War gave people the right to inspect returns, saying the burden was a common one. But by 1872, the tide had turned and secrecy was once more the way until the 1920s.

"In cities across the nation, readers opened the newspaper on October 24, 1924, to find a roster of local taxpayers and the sums they sent to Washington," said a taxanalysts.com article entitled "Show Us the Money" by Joseph J. Thorndike. "In New York, John D. Rockefeller Jr. led his neighbors (and probably the nation) with a payment of $7.4 million, or roughly $87 million in today's dollars."

Only two years after Rockefeller's tax millions were published, the provision was repealed. But if you think the idea of making tax returns public again is unthinkable, the taxanalysts.com article asks you to consider how local property taxes are handled. The assessment on your land is public record. Also, people show their tax returns when it suits them, such as when they shop for a mortgage, apply for a student loan, or buy a car, and the anticipated refund can become a down payment.

Rooney said 45 percent of the tax money collected comes from individual income tax and that Uncle Sam is going about collecting money the wrong way. If the process was more open, people might be more receptive and "be damn sure they pay their share, not their share and part of someone else's."

The article does say that such public disclosure may be perilous in a world where identify theft is an issue. But it suggests releasing partial information, such as the total income plus taxes paid.

"By exposing gross inequities among taxpayers, it might prompt interest in fundamental tax reform," the article said. "And over the long term, that's our best hope for fiscal justice."

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