'Taxation and Surveillance: An Agenda' by Michael Hatfield in (2015) 17
Yale Journal of Law and Technology 319 [
PDF] comments
Among government agencies, the IRS likely has the
surest
legal claim to the most information about the most
Americans:
their hobbies, religious affiliations, reading activities, travel,
and medical information are all potentially tax relevant.
Privacy scholars have studied the arrival of Big Data, the
internet-of-things, and the cooperation of private
companies
with the government in surveillance, but neither privacy nor
tax scholars have considered how these technological advances
should impact the U.S. tax system. As government agencies
and private companies increasingly pursue what has
been
described as the “growing gush of data,” the use of
these
technologies in tax administration will become increasingly
important to consider. This Article provides an agenda of items
for discussion, debate, and research related to the
development,
implementation, and effects of a surveillance-facilitated tax
system.
Hatfield argues
Although the Internal Revenue Service (IRS) “has al
ways
been an information intensive agency,”
its information-
gathering has never been the focus of privacy scholars. Those
scholars have instead focused on agencies such as the National
Security Administration (NSA).
But the IRS’s legal claim to
private information is remarkable. It is entitled to collect
information about who sleeps how often in your house,
your
hobbies,
your reading preferences,
your religious affiliation,
your travel plans,
your weight and your doctor’s
recommendations about it,
your spouse or your dependent’s
abortion, sterilization,
or gender identity disorder,
and if
you were considering a carnal
quid pro quo
when you made a
gift to your “mistress.”
Yet, privacy scholars have taken no
note of the IRS’s extraordinary legal claim to such
information.
From the reverse angle, despite the information-intensive
aspects of tax law, tax scholars have not taken note of the
increasing pervasiveness of information technology.
Modern
technologies are creating “minutely detailed records” of our
existence,
increasingly facilitating the “persistent, continuous
and indiscriminate monitoring of our daily lives.” One information privacy scholar described the radical and
technological transformation of personal information:
The small details that were once captured in dim
memories or fading scraps of paper are now
preserved forever in the digital minds of
computers, vast databases with fertile fields
of personal data . . . . Every day, rivulets of
information stream into electronic brains to be
sifted, sorted, rearranged, and combined in
hundreds of different ways. Technology enables
the preservation of the minutia of our everyday
comings and goings, of our likes and dislikes, of
who we are and what we are . . . . It is ever
more possible to create an electronic collage that
covers much of a person’s life—a life captured in
records, a digital biography composed in the
collective computer networks of the world.
A prominent national security advisor has predicted
that by 2040, all of our daily activities will be known by
"governmental" and corporate entities” pursuing the “growing gush
of data” from the “internet of things.” As we move towards such a
future, the IRS most likely will be among those entities
pursuing this growing gush of data. This Article suggests an
agenda for discussion among privacy and tax law scholars:
issues we ought to consider, research we ought to pursue, and
debates we ought to have.
In Part I of this Article, I describe the flow of
tax-relevant
information from taxpayers and third parties to the
IRS. I point out two significant problems in that information flow: the
compliance burden and the compliance gap. In Part II, I predict
that, over the next twenty-five years, surveillance
technologies will be used to reduce the compliance burden and gap. I
consider the technological and political factors that may pave
or block the way for such an increase in surveillance to improve
tax administration. In Part III, I recommend a research agenda
in an effort to make the integration of surveillance into tax
administration more beneficial than harmful. Ultimately,
reforming tax law to fit the emerging technology and our
privacy expectations will be essential to integrating the
information technology revolution into tax administration
without disrupting the administration itself.