What Voters Can Learn From Tax Returns
Tax returns and annual financial disclosures contain different information
Candidates and members of Congress are required by law to file personal financial disclosures that are designed to shed a light on their potential conflicts of interest.
These documents show a lawmakers’ assets and liabilities, reported in broad ranges. Tax returns, in contrast, provide snapshots of their annual net income, are subject to audit and require taxpayers to report specific amounts.
Transparency advocates have argued that disclosure rules are too broad, enforcement is too lax, and that tax returns could help provide a fuller picture. Here is a look at where the two documents differ.
Tax returns show exact amounts for all sources of income, including wages and investment income for taxpayers, and their spouses — if they file jointly. Personal financial disclosures show ranges of unearned income. While the salaries of members of Congress are public, congressional candidates must disclose their earned income once they raise or spend more than $5,000. Disclosures also show the source, but not the amount, of income earned by a spouse if it exceeds $1,000.
Personal financial disclosures provide ballpark values for cash, stocks, investments, certain trust assets, among others. Tax returns have limited asset disclosure requirements, for example, when stocks or business assets are sold.
Personal financial disclosures provide values of certain personal liabilities in broad ranges, but not including mortgages or loans on a personal residence, personal vehicles or other personal property, and revolving charge accounts with balances over $10,000 at the close of the preceding calendar year. Tax returns largely do not require disclosure of personal liabilities.
Tax returns show the amount of income taxes paid, and the amount and types of deductions and credits taken. This information is not required on a personal financial disclosure.
Tax returns show real estate taxes paid and net income, gains or losses from properties being rented or sold. Personal financial disclosures show the value of property owned, in ranges, not counting a personal residence.
Tax returns list itemized charitable contributions. This is not required on a personal financial disclosure.
Personal financial disclosures show gifts and travel reimbursements.