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Our post today features an Op Ed that Les wrote reacting to the Pro Publica release of information. Because Les is on vacation, I have the opportunity to introduce his post which he asked me to do because I was making comments on the release as well. My first comment goes not to the significant disclosure violation that appears to underlay the information provided in the article but to whether we should adjust our disclosure laws so we are not shocked by the revelations in the article. My second comment relates to the IRS and its protection of information.
I wonder if the publication of this information should cause us to rethink the disclosure laws. These returns would have been disclosed in the 1860s when the first income taxes were imposed. They would have been disclosed, at least in part, on returns filed after the passage of the 16th amendment. But for the kidnapping of Lindbergh’s baby, maybe they would still be partially disclosed. There was a vigorous debate surrounding disclosure back when the income tax was only imposed on the wealthy. Should part of the wealth tax discussion be disclosure of their returns or parts of their returns such as the bottom line of tax paid.
It also seems that we have quickly forgotten that the IRS kept, and continues to keep, Mr. Trump’s returns from disclosure when there was intense interest. With the filters the IRS has on access and the breadth of individuals in this disclosure, it’s difficult for me to imagine it came from an IRS source. Nonetheless, a thorough investigation is needed to make sure the IRS filters capture access to this information on its system and to make sure that the leak did not come from the IRS. Keith
Last week Pro Publica released the first report of a series that will focus on the financial lives of our nation’s richest people and that it will use over the next few months to “explore in detail how the ultrawealthy avoid taxes, exploit loopholes and escape scrutiny from federal auditors.”
Released close in time to the 50th Anniversary of the publication of the Pentagon Papers, the report is based on extensive confidential data. Longtime tax reporter David Cay Johnston, in noting how the report detailed in a granular way how little income taxes some of our richest have paid over the past decade or so hailed the Pro Publica release as the “biggest and most important” tax story in his 55-year career.”
Over the weekend, I wrote an opinion piece on the Pro Publica report for NBC News’ Think series.
The culture of respecting taxpayer confidentiality is deeply engrained in the IRS and is punishable by civil and criminal penalties. While Pro Publica did not reveal who released the information (and states it did not know the source), it is not clear whether the perception that the IRS cannot be trusted with confidential information may have an impact on some of the major procedural/tax administration proposals in the Biden Made in America Tax Plan.