Losing Income Tax Privacy Is a Real DangerTags Bureaucracy and Regulation
Last week the New York Times published some of President Trump’s 1980s and 1990s tax returns information. The information detailed President Trump’s financial difficulties during that time. While you would not know it from reading some media reports, this is old news. In fact, President Trump openly discussed his financial difficulties on his popular reality television show.
What should be of great concern is the possibility that the person who leaked the returns — who the paper says has legal access to President Trump’s tax records — is an IRS employee seeking to undermine the president. This would hardly be the first time an IRS employee has leaked confidential information because he disagreed with the taxpayer’s politics. In 2014 the agency had to pay the National Organization for Marriage 50,000 dollars after an IRS employee gave names of the group’s donors to the group’s opponents.
In 2014-2017, my Campaign for Liberty group was repeatedly threatened by the IRS because it refused to give the agency the names of and other information about its top supporters. Fortunately, the IRS rescinded the regulation forcing groups like Campaign for Liberty to violate supporters’ privacy or face legal penalties. However, campaign finance reform legislation that recently passed in the House of Representatives would require the IRS to resume collecting this information, and the New York attorney general is suing the IRS to force the agency to reinstate the regulation.
The right of groups like Campaign for Liberty to protect their supporters’ privacy was upheld by the Supreme Court in NAACP v. Alabama. As Justice John Marshall Harlan wrote, “Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs.”
Traditionally, presidents have used the IRS to harass their political opponents instead of presidents’ opponents using the IRS against them. Franklin Roosevelt audited people critical of the New Deal and supportive of the America First movement. Lyndon Johnson ordered audits of opponents, and John Kennedy shared tax return information with Washington Post editor Ben Bradlee.
During the Obama administration, the IRS targeted groups opposing Obamacare. The agency went after anti-Iraq War groups during the George W. Bush years.
If the Times did obtain Trump’s tax returns information from an IRS employee, that employee is not in the same category as whistleblowers like Edward Snowden or Chelsea Manning who exposed government wrongdoing. The leaker or leakers of President Trump’s information are releasing private tax information.
The IRS regularly violates the civil liberties of taxpayers generally. In fact, the income tax system forcing taxpayers to reveal potentially incriminating information on their tax returns violates the principles of a free society. Americans’ liberty and prosperity will never be secure until Congress repeals two great mistakes of 1913: the income tax and the Federal Reserve.