This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Friday, July 11, 2008

Government publishes tax returns; millions panic

Posted by Matt

Today's post was inspired by an article I read in USA Today a few weeks ago while on vacation. It starts like this: "Every year, Sweden publishes everyone's income tax returns. So do Finland and Norway. And nobody really cares."

So, what makes the Scandinavians so well adjusted? A deputy economic minister in Italy tried publishing tax returns online earlier this year, but apparently had to take the information down quickly due to the fuss that Italians raised. In the U.S., "Federal law prohibits the release of that private information," but imagine the panic if it leaked somehow?

Americans are relatively uptight about a lot of things, but (as Paul posted about previously) it is hypocritical to be so secretive about our financial lives while simultaneously flaunting our possessions. It probably results from the fact that many people's possessions do not accurately reflect their true financial standing, e.g., they have more shiny metal in their garages than they do in the bank.

The article indicated that Scandinavians have a very different attitude:
Making the data public demonstrates the Scandinavian tradition of jantelag, which translates roughly as nobody is better than anyone else, says Veera Heinonen, spokeswoman for the Finish Embassy in London.

This reminded me of "tall poppy syndrome" that you sometimes hear about in Australian or Canada; essentially "no one likes an overachiever." However, I've read that people (or maybe just corporations) in these countries are realizing that competition drives growth. The United States is a perfect example; here, everything is a competition. Everyone wants to be a "success". The problem? We typically measure that success with dollar signs. Why? Because it is an easy and mostly objective scale.

How else are we to measure success? Does being a good parent count? If so, how can we measure that? I don't know of any type of parenting score that I could plot on a chart. How about being a valuable member of your community? The best I can think of there is public service hours, but that tracks effort more than result. What to do?

This line of thought lead me to one of my favorite quotes from Albert Einstein: “Not everything that can be counted counts, and not everything that counts can be counted." I'd apply it in this situation to mean "don't tie up so much of your self worth in your income level."

So, back to the question at hand...do we want our tax returns published? Consider that home selling prices are already available online (for Washington County, OR) and I've used this information extensively when evaluating new home purchases and pricing houses for sale. We might get similar value from being able to browse salary information. Personally, I feel pretty satisfied with my salary, but I DO occasionally wonder how it compares to the salaries of others with similar jobs. I wonder "Should I be negotiating harder at annual review time or clinging to this job for dear life?" Looking at other people's tax returns might help, though it would probably have the same limitation of sites like Salary.com, namely the difficulty of finding a job description that exactly matches mine. The only real argument that I can make for doing things like publishing tax returns (and this disregards any discussion of whether it is worth the costs, by the way) is that people are more likely to behave as they feel that they should ("do the right thing") when under scrutiny.

And we should just get over ourselves! ;)


Leah in Oregon said...

Great post, Matt. You make some very good points: why is it that dollars are what defines our success in America? Do you think that publishing everyone's earnings would make people a little more responsible with their spending? After all, if everyone knows how much you make, what do you have to prove? If you have a modest income, that expensive car might be seen as more of a sad joke than something to admire. Makes you think...

tiffanie said...

what an interesting concept...not sure how i personally feel about it. we're such a dollar hungry society, and i think a majority of people flaunt what they have w/o having the means to actually pay for it. no wonder they'd want to hide their financial status.