In a few days, President Obama will release his tax returns. So will Vice President Joe Biden and a smattering of other politicians around the nation. Willing to sacrifice privacy for the sake of transparency, they will offer us a glimpse into their personal financial lives.
Now what about the rest of us? By law, all tax returns are shrouded in secrecy. The IRS is barred from releasing them or any shred of personal data derived from them. The IRS can't even share your information with most other federal agencies. ...
Congress has twice recognized our common interest in private payments.
During the Civil War, lawmakers gave each citizen the right to inspect returns. "He is interested in these returns," explained the commissioner of internal revenue, "because the burden of the national duties is a common one, and every person should be required to pay his due proportion of it."
Public returns disappeared, along with the income tax itself, in 1872. But half a century later, Congress dropped the veil again. 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. ... The voyeuristic appeal of such disclosure was undeniable -- and more than a little unseemly. In fact, popular discomfort with the 1924 experiment prompted lawmakers to repeal the publicity provision two years later.
But the case for public tax returns, if a bit shaky, is still compelling. Publicity reveals the actual, rather than the theoretical, functioning of the tax system. By disclosing disparities in the tax payments of people with similar incomes, public returns compensate for the most serious weakness of the income tax: the tendency among politicians to riddle it with loopholes.