Dorothy Brown, a professor at Emory University who specializes in tax law, has proposed an idea to finally spur tax reform: examining the tax returns of all 535 members of Congress. I recently spoke with her about the proposal, which she calls "The 535 Report." Our conversation has been edited and condensed.
What is the 535 Report?
Currently, members of Congress are not required to disclose their tax returns. The 535 Report would be an IRS report summarizing the tax returns of the 100 senators and the 435 members of the House of Representatives. It wouldn't disclose any particular member's tax returns, which would be against the law. Instead, the 535 Report would be a summary that would give the public a view of how tax laws affect the lives of their elected officials, as opposed to the lives of the American public.
Do you think enough people have sufficient understanding of tax policy and reform for this transparency to be valuable?
I think people understand that the tax laws are too complicated. I think people understand that the richest Americans win. Poll after poll shows that the American public is committed to a progressive tax system, but we don't have one because the richest Americans pay lower tax rates than middle-class Americans. I think most Americans get that, but I don't know that they know what the next step is.
There's one thing we could do to eliminate most of the inequity in the tax laws: not taxing stock and capital-gains income differently than we tax labor income. If you were to tax income from stock the same way as income from labor, a lot of the inequity goes away. I believe the 535 Report would show that members of Congress get a significant amount of income from stocks and dividends, in a way that the average American does not.
What prompted this idea?
I have been writing and thinking about tax reform—or, I should say, the lack of tax reform—for a really long time. The typical American cannot take advantage of most of the deductions and loopholes that I believe members of Congress are taking advantage of because of their incomes. And I believe, if the public saw this great disparity, they might demand tax reform from the bottom up. So the impetus is: What do we do to get a fair and more equitable tax code? And to me, the answer is: Let's look at the lack of equity in the rules that advantage members of Congress.
How long have you been talking about the 535 Report?
I spoke about this at a Pepperdine University Law School symposium in January 2013 and wrote a law-review article for the symposium that was published that April. I study presidential tax returns, which are voluntarily disclosed, and I started thinking: Imagine what I'd find if I had congressional tax returns.
What would it take to make this happen?
There's a precedent. The IRS started releasing the "top 400 report" in 2003, which is a study of the top 400 adjusted gross incomes among U.S. taxpayers. That report was released in response to requests.
Do you see any potential pitfalls or drawbacks to your proposal?
Well, what's the worst thing that happens? The worst thing is that the IRS issues the 535 Report, and when you compare Congress members' taxes with the average American's taxes, you don't see a difference, and therefore there's no impetus for reform. I know that is not going to happen.
What needs to be done to take this idea further?
We tend to talk about taxes around April 15, and that's about it. But every conversation that we have about inequity and income inequality should be talking about tax policy. I think taxes are everywhere. We need to think of what role tax policy is playing in disadvantaging certain populations. Whether it's the middle class, or African-Americans, or another minority group, tax policy matters.