Progress Report on a Taxpayer Receipt

April 10th, 2012

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“Would you like a receipt for that?” That simple question gives customers trust and confidence in their purchases. With a similar gesture, the federal government could gain some sorely needed trust and confidence from citizens. A taxpayer receipt would be a way to acknowledge citizens’ contributions to the Treasury and show them where their tax dollars go.

That’s why Third Way first proposed the idea in 2008 and released an online taxpayer receipt calculator last year. It helped fuel a flurry of activity over the idea. We have updated our receipt for the 2011 tax year. It lets users enter their income taxes and FICA taxes paid so they can see their contributions to nearly 400 items from the federal budget ranging from the FBI to the salaries of member of Congress. It demonstrates how a taxpayer receipt can show citizens what they are getting for their money.

The taxpayer receipt isn’t law yet, but there’s been lots of activity. Here is an update on the progress to date:

The White House has released its own version of an online taxpayer receipt for the second year in a row. First mentioned by President Obama in his 2011 State of the Union Address, this receipt lets users see where their income taxes in terms of major spending categories like national defense and health care and many subcategories. It accounts separately for the Social Security and Medicare trust funds.

Bipartisan legislation has been introduced in Congress. Sens. Bill Nelson (D-Fla.) and Scott Brown (R-Mass.) and Reps. Mike Quigley (D-Ill.) and Todd Platts (R-Penn.) have introduced the Taxpayer Receipt Act (S. 437/H.R. 1527). It has won support from a diverse set of organizations like the Bipartisan Policy Center and Americans for Prosperity. Rep. Jim McDermott (D-Wash.) has introduced a similar bill (H.R. 1583).

The National Taxpayer Advocate, Nina Olson, who looks for ways to make the IRS more taxpayer-friendly, endorsed the taxpayer receipt idea. She says “it would help make taxpayers more aware of the connection between the taxes they pay and the benefits they receive.” (p. 368 of 2010 annual report)

State and local elected officials have picked up the idea. Georgia State Senator Doug Stoner (D- Smyrna) has created an online receipt for Georgia taxpayers. And New York City Manhattan Borough President Scott Stringer (D) has done the same for NYC taxpayers. These latest efforts follow on a long-standing California online income tax receipt.

Other organizations like What We Pay For have created their version of an online receipt. Its website inspired a contest sponsored by Google for creative ways to visual the complex budget data. Also worth noting is the New York Times’ creative illustration of President Obama’s budget proposal.

Numerous articles and op eds have featured the taxpayer receipt. Here is a sampling: an Ezra Klein blog post; a Washington Post op ed; and a couple of Democracy: A Journal of Ideas articles – Spring, 2010 and Spring, 2011.

Lastly, the idea has international reach. United Kingdom Chancellor George Osborne has announced a taxpayer receipt will be sent to every taxpayer.

We hope you agree this is an idea whose time has come.