Tax-sparency

Trump won’t release his tax returns. But in these countries, every citizen does.

Elena Scotti/FUSION

For months, Donald Trump’s refusal to release his tax returns has loomed over his candidacy. It’s not just the allegations that he avoided paying millions in taxes, but that he’s the first presidential candidate since Richard Nixon not to release them. In every presidential election for decades, the tradition of candidates releasing their tax returns has been seen as an act of good faith and transparency toward the American public—to share something as private and personal as your financial records is to strip down and bare it all. Now, with Election Day upon us, Trump’s returns still haven’t materialized.

But elsewhere in the world, it’s as easy to look up someone’s tax returns as it is to check their Facebook page. Every autumn in Norway, Sweden, and Finland, tax returns are posted online in public databases, where you can find information about income and taxes paid in just a few clicks. The relative ease at which you can learn someone’s income information—from your neighbor to your favorite celebrity—has been called “tax porn” because it’s so hard to resist looking.

“Humans are social animals, so they care a whole lot about comparing themselves to others,” said Ricardo Perez-Truglia, a professor of economics at UCLA who has extensively studied Norway’s public tax system. “Some care about being better-looking than others, some people even care about not having smaller hands than others. And, of course, some people care a lot about being richer than others.”

After Norway made its records available online in 2001, it became much easier to look up someone’s salary, which led to what media outlets at the time called a “frenzy of snooping.” Perez-Truglia’s research even found that after the records were posted each year, “Norwegians seemed busier snooping each other’s incomes than watching Youtube videos.”

So in 2014, Norway instated a new rule: You can still look up, say, your next-door neighbor’s gross earnings, but that person will receive an email notifying them. Since then, requests to snoop have reportedly gone down, according to Perez-Truglia. In 2011, Sweden also replaced its open database with a system where people can request tax returns only if they have a legitimate need.

If this sounds wild, consider that there’s actually a history of making taxes public in the United States, according to Mark Gergen, a professor of tax law and policy at the University of California, Berkeley.

“When the corporate excise tax was first enacted in the US in 1909, corporate tax returns were made public,” Gergen told me. And in the 1920s, an individual’s tax payments (but not their income) were also available for anyone to see. “In 1934, Congress enacted a statute requiring individuals and corporations to file a ‘pink slip’ disclosing their gross income, net income, and tax paid.”

That statute never went into effect, and since then, financial records have been considered private information.

In Scandinavia, where openness, egalitarianism, and transparency in government are cultural cornerstones, the public tax system has been ongoing for centuries (since 1863 in Norway). And there is a lot to gain from making this kind of information public: It leads to greater income equality, discourages tax evasion, encourages people to pay off tax debts, and may even pressure people who are top earners to use their money toward charitable projects. One study on Norway’s program found that since tax returns were posted online, there has been a 3 percent higher reported income.

Ossi Sopen-Luoma, an accountant in Finland, told me that it’s made Finnish people more conscious of policies regarding taxes and pensions. “It strengthens the transparency in our community and gives some information and control over what is going on at the top,” he said.

The tax returns are stripped of most of their details by the time they’re posted online. As Gergen pointed out, “disclosure would have to be limited to bare-bones information, like the tax paid, and maybe adjusted gross income, because of privacy concerns.” Because of this, Sopen-Luoma said he hasn’t heard of any cases of identity theft or other problems due to the public listing of tax returns in Finland.

But unregulated access to financial records can have emotional effects, too. In 2012, one Norwegian sued the state when his return from 2010 included inaccurate information. He argued that the mistake constituted a “violation of his human rights”—and he won his case.

Perez-Truglia has also found that publicly listing tax information can make low-earners feel worse knowing how they measure up to others.

“When the incomes become easily accessible online, that should mean good news for the rich: Now all of their high school classmates, ex-lovers, and relatives would find out that they are rich,” Perez-Truglia told me. “For the poor, it could become a source of embarrassment.”

Anecdotally, he said there are stories of Norwegian kids who have been bullied after their classmates found that their parents were poor using the Norwegian online search tool.

But Sopen-Luoma, the Finnish accountant, told me he doesn’t see why anyone would have a problem sharing their financial records. Individuals who are uncomfortable with this publicity, he said, may have something significant to hide—Donald Trump included.