Connecticut state lawmakers—with support from government unions—are pushing a bill that would allow up to 10 senators and representatives access to anyone’s tax return under the guise of promoting equity and fairness in Connecticut’s tax system.
Snuck into a bill addressing how the Department of Revenue Services analyzes tax data is language that would allow legislative leadership access to individual’s personal tax information upon written request to the DRS Commissioner.
Senate Bill 443 – An Act Concerning the Tax Incidence Report, Tax Incidence Analyses, and the Disclosure of Returns and Return Information — is sponsored by Representatives Josh Elliott, D-Hamden, Kate Farrar, D-West Hartford, and Michael Winkler, D-Vernon, and received ample support from state employee union leadership who have pushed for years to raise taxes on high-income earners.
While most of the bill determines how future tax-incidence analyses will be performed, it included a paragraph ensuring legislative leaders can get access to individual tax returns “for purposes of evaluating and formulating tax policy.”
Connecticut AFL-CIO President Ed Hawthorne testified that the bill “fosters transparency by authorizing DRS to share tax return information with chamber leaders and leaders of this committee.”
“Without access to this information, policy makers can only make educated guesses about how their judgements will move the needles on fairness and equality,” Hawthorne wrote.
AFSCME Council 4 executive director Jody Barr also highlighted the “disclosure of tax return” in supporting the measure.
DRS Commissioner Mark Boughton, however, said his department had concerns over releasing individual income tax information to political leadership.
“This protected data is protected for a reason,” Boughton told the Finance Committee. “God forbid if any of that information got out into the public domain. There are social security numbers on their email addresses. And really, it undermines the whole system of full disclosure. So, when somebody fills out those tax documents for us, they trust that they’re going to be completely honest, and that their information isn’t going to be spread all over the internet. And unfortunately, that’s what happens.”
DRS can already release tax information in tightly defined situations. For instance, it can share it with the heads of departments or agencies if there is reasonable belief that federal law is being violated or if the information is required in the course of duty for that agency “provided that no such agency or office shall disclose such returns or return information.”
The Connecticut Business and Industry Association also raised concerns.
“While well-formulated tax policy is in the interest of the state, allowing access to individual returns would undermine taxpayer privacy and the confidentiality of a voluntary tax reporting system,” Eric Gjede, vice-president of legislative affairs for CBIA wrote. “Further, access to individual return information could be used out of context to target specific taxpayers.”
“Lawmakers already have access to aggregated tax information for the purpose of policy making. The state’s tax policy should be based on all taxpayers, not formulated in response to individual returns,” Gjede wrote.
The push to disclose individual tax returns to members of the government has its roots in President Richard Nixon’s administration and his “enemies list,” in which the administration sought to target their “enemies” with tax audits and manipulating grants, federal contracts and prosecution.
Union leadership and some progressive Democrats in the legislature have been targeting Connecticut’s top earners in order to rewrite the state’s tax code, arguing the rich pay too little in taxes compared to poor and working-class families.
But allowing political leaders to access tax returns raises privacy concerns, not just for the rich, but for nearly anyone who files their taxes in Connecticut with the potential for that information to be leaked to the public.
“Security is a big issue,” Boughton said. “Somebody could get hurt. Something could happen to them. And there also could be business liability for the corporations that may have data or information that is proprietary or unique in their filings.”
Boughton said he understood that the Finance Committee wanted more information included in the Tax Incidence report but said there is likely a better way to “meet in the middle” without violating individual privacy or trust in Connecticut’s state government.
“We don’t want to undermine the trust and we certainly don’t want public and private information becoming public,” Boughton said. “But I have heard from the committee that they want more data, they want more information. I think we can sort of meet somewhere in the middle to get this information out there while still protecting our data.”