We do our tax returns in private. Nobody needs to know how much we earn and how much tax we have to pay. According to economist Anne Kingma, this has to change and tax returns should be made public. Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, however, sees some objections to this.
Sound arguments?
In an interview with NPO Radio1, Kingma gives three arguments for making tax returns public. First of all, the publication of tax returns would help combat wage discrimination. It would become much easier to find out exactly how much your colleague earns. Second, publishing the returns could stimulate a debate on fair and more efficient taxation, as the impact of the Dutch tax system would become much clearer. The third argument is about tax evasion. Publication of the returns could greatly reduce tax evasion because of fear of losing face among entrepreneurs.
Not for secondary purposes
According to Kavelaars, the problem of wage discrimination is not something that should be solved by publishing tax returns. ‘That is not something that is verifiable, because every job is different. You can't just say that if two people have different wages, this is right or wrong. You would have to do an investigation at the companies.’ According to Kavelaars, the tax return is only meant to inform the government about what you have to pay in tax in a year, and not for all kinds of secondary purposes. ‘If you want to solve something related to unequal treatment, you have to make regulations for that and ask the companies for that information.’
Too complicated and too individual-specific
Kavelaars also explains his objections to the second argument. He does not believe that making tax returns public could stimulate the debate on fair taxation. Kavelaars explains that tax returns are very difficult to understand. ‘You really can't see anything in it. It contains all sorts of deductions and additions that are different for everyone. You would have to know a lot more about how the tax system works.’ The returns are simply too complicated and too individual-specific to be debated. ‘You really don't get an understanding of how the tax system works from looking at my tax return.’
A map for criminals
The third argument is also refuted by Kavelaars. According to him, it is not so easy to tell from someone's tax return whether they are committing tax fraud. ‘The vast majority of income in the Netherlands is simply income from employment. We also have a lot of capital income and that information is supplied by the banks. So there is no fraud in that. There is only a very small amount of fraud in the business sphere, and the neighbour will not find that by making the returns public.’ According to Kavelaars, it is also not harmless to make everyone's return public: it would make it much easier for criminals to see where money can be found.
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The full item van NPO Radio1, 24 Feburary 2021, can be found here (in Dutch).
