The Battle For Transparency In Tax

n 1969 a 38-year-old lawyer in the Treasury Office of Tax Legislative Counsel contemplated the social ferment gripping the United States. Surging opposition to the war in Vietnam, combined with the moral challenge of the civil rights movement, had convulsed American politics. Both major parties were scrambling to respond, even as the electoral map was shifting underfoot. The nation’s postwar political regime, stable for the last quarter-century, was suddenly in flux.

And Thomas F. Field was wondering what it might mean for tax.

From his perch at Treasury, Field had a clear sense of what was wrong with the nation’s tax system. “The whole legislative process was dominated by special interest groups urging narrowly focused measures designed to confer tax benefits on the few at the expense of the many,” he later recalled in a short history of the period.

Field also had a good idea of how to fix it. “Perhaps a group could be formed to represent the general taxpaying public in Congress and to combat special interest tax giveaways,” he mused.

Perhaps it could. And indeed it was. That group, which Field established on Bastille Day in 1970, is today known as Tax Analysts.

Early Days

The story of Tax Analysts begins with the story of a young Tom Field. Born in Mineola, New York, on September 5, 1931, he attended LaSalle Military Academy, the University of Notre Dame, the University of Oxford, and Harvard Law School. He saw military service during the Korean War (and eventually retired from the U.S. Army as a full colonel, after 32 years of service). After graduating from Harvard, Field worked for five years as a trial attorney for the Tax Division of the Justice Department. He followed that stint with five more years in his Treasury post.

Most tax attorneys with 10 years of government experience have a different plan for their future than the one Field settled on. “When they left, they almost always entered private practice and enjoyed substantial financial rewards,” Field recalled. “If, instead, I left Treasury to organize a public interest effort, I would leave these opportunities behind.”

That’s putting it mildly. Field consulted with friends and colleagues about his plans for a new organization, and he found them “uniformly supportive.” But the initial risk was all Field’s, since he would be the sole employee of this new organization. And an uncompensated one, at least initially. His wife, Marcia Field, was the organization’s first benefactor, supporting Tax Analysts by supporting her husband. Marcia Field was herself a Treasury economist and keenly aware of the systemic problems her husband was trying to confront.

Field is candid about the mixed motives behind his decision to leave Treasury and found a new organization. “On the one hand, I had a sincere interest in promoting social justice, rooted in a good education and in religious traditions,” he recalled. “On the other hand, I was aware that I might make a name for myself through effective work on behalf of the public, and I hungered for the acclaim that sometimes accompanied successful public interest efforts.”

Two Organizations

Initially, Field established two organizations. The first was named Tax Analysts and Advocates (TAA), a charitable and educational group designed on the model of a public interest law firm. In practice, Field expected TAA to focus heavily on educating the press. During his years at Treasury, Field had been struck by the rather limited tax knowledge of most reporters. He believed that “the outcome of tax legislation could be influenced for the better by well-informed press coverage from a public-spirited source.”

Field’s second organization, founded simultaneously, was Taxation With Representation (TWR), a social welfare organization that would function as a taxpayers’ lobby. “The general public was seldom if ever represented in the discussions at Treasury and in Congress that preceded enactment of new tax laws,” Field recalled. TWR would fill that void in the tax legislative process.

Initially, these two organizations had precisely one employee. Field toiled away in the basement of his own house, and he remembers the days as more lonely than exciting: “Each weekday, I would put on a suit and tie (to put myself in a working frame of mind) and march down the cellar stairs to our basement.”

Not surprisingly, money was tight. Or, more precisely, nonexistent. During the first year of operations, Field loaned the organization $60 to pay for necessities like paper and postage; that loan constituted both organizations’ entire income for 1970.

Over the next few years, thanks to grants from a few sympathetic organizations as well as some individual contributions, Field cobbled together enough money to begin hiring staff. He turned to some longtime friends and supporters, including Gerard Brannon, a former Treasury economist; James Byrne, a financial journalist; Ira Tannenbaum, a former Treasury tax attorney; and Samuel Hasting Black, a tax lawyer and former congressional aide.

The new money, which included $50,000 in crucial seed money from the Stern Fund, also allowed TAA and TWR to move out of Field’s basement and into a Washington office at 732 17th Street, NW.

Early Milestones

Field remembers two milestone achievements from the first half-decade of his years with TAA and TWR.

The first was a signal victory in TAA’s public interest litigation program. The effort was headed up by William A. Dobrovir, a Washington attorney who had worked previously with Ralph Nader’s Public Citizen Litigation Group. TAA filed suit under the Freedom of Information Act seeking access to IRS letter rulings and technical advice memoranda. Arguing that these previously undisclosed documents amounted to a body of “secret law,” Dobrovir and Field insisted that they should be made publicly available. After a bitter fight, TAA won (although the IRS continued to litigate the broader issue for several more decades).

The second milestone involved President Richard Nixon’s personal tax returns. In 1973 Nixon had been engulfed by a public scandal involving a tax deduction he had claimed for the donation of his official vice-presidential papers to the National Archives. (Prior coverage: Tax Notes, June 13, 2016, p. 1527.) The deduction had come to light in an unrelated lawsuit, and TAA had been tipped off by former IRS Commissioner Sheldon S. Cohen, then working as an attorney for the Democratic National Committee. Field asked Tannenbaum to investigate the deduction, and the result was an extensive report detailing numerous problems and irregularities. TAA circulated this report among Washington journalists, and it brought depth and rigor to a highly contentious debate that generally lacked both.

Money Trouble Again

Those early successes eased the pressure on Field, but events conspired to keep him from getting complacent. The Stern Fund served notice that it was in the business of providing seed money, not continuing support. Field was forced to retrench, cutting almost all the TAA and TWR staff and moving both organizations back to his basement.

But in a move that would actually pave the way to solvency, Field also started charging for TAA’s weekly newsletter, Tax Notes. First appearing in 1972, Tax Notes had been distributed free of charge to members of the media. But with TAA’s survival on the line, Field decided he had to charge for the publication. In relative short order, TAA had sold “several hundred subscriptions” — enough to keep the wheels turning, at least for the time being.

Initially, Tax Notes had been conceived as a simple news summary. “I wrote the first issue in the backyard of my Arlington home on a sunny Saturday morning,” Field said. It was typewritten, and in the early years, published on color-coded paper, with yellow pages for news, blue for IRS materials, and so forth. “This gave rise to jokes that the news we published constituted ‘yellow journalism,’” Field recalled.

As Field began to charge for Tax Notes, he also began to sell full-text documents. Many of those documents were theoretically available from Congress or government agencies, but not in a timely or convenient fashion. Tax practitioners were eager to embrace a quick and easy document service. This new source of revenue, moreover, dovetailed with the organization’s growing commitment to disclosure litigation. As TAA continued to fight for the public release of agencies’ working law, it supported these efforts by making the resulting documents conveniently available to practitioners through its document service.

Those revenue streams were crucial to the survival of the young TAA and TWR, Field recalled. In the short term, they helped pay the bills. But just as important, “the revenues showed foundations that TAA was making efforts to become self-supporting, and this aided our efforts to obtain additional grant funding,” he wrote.

End of TWR

As TAA developed its nascent publishing operations, TWR continued to lobby Congress on behalf of the public. Its specific agenda, however, was notably vague. Unlike most other tax-focused lobbying groups, TWR lacked a clear ideological focus. Instead, it advanced a notion of “tax reform” that was at once both historically specific and substantively malleable.

In many respects, the public interest mission of TWR owed a lot to Stanley S. Surrey, one of the great tax reformers of the 20th century. Surrey was famous for many things, but he is probably best known as the inventor and publicist of the concept of tax expenditures: targeted provisions of the tax law — including exclusions, deductions, credits, or special rates — designed to benefit some activities or taxpayers.

Surrey’s career, however, was about more than simply tax expenditures. In fact, he is best viewed as the leading exemplar of the post-World War II tax reform movement. This interdisciplinary intellectual school, which included lawyers, economists, and accountants, believed deeply in the virtues of individual and corporate income taxes. But members of the school also believed that such taxes were in need of serious improvement. Specifically, they argued for expanding the tax base of both levies through eliminating various tax preferences. At the same time, they supported a simultaneous reduction in tax rates. Undertaken together, those changes would ensure adequate revenue while minimizing economic distortions.

Surrey had been one of Field’s professors at Harvard. And by the time Field joined Treasury, Surrey was already halfway through his eight-year stint as assistant secretary for tax policy. Field’s repeated exposure to Surrey clearly left a mark. Field seems in particular to have absorbed much of his teacher’s simmering outrage about the proliferation of special tax preferences.

In 1957 Surrey wrote an article asking his fellow tax lawyers if they might find the courage to push back against the special interests that dominated tax lawmaking. Might they find some way to transcend their own parochial interests — and possibly even those of their clients — to stand in defense of sound tax policy? “Who speaks for tax equity and tax fairness?” he asked them in a rhetorical challenge.

Thirteen years later, Field answered by founding TWR.

But if TWR had a fine pedigree in the tax world, it was still an odd beast in the broader world of Washington. Lacking a clear ideological bent, it was hard for lawmakers to understand it.

The organization, for instance, tended to organize panels for congressional hearings that featured experts with varying, and sometimes opposing, political views. “This sometimes confused members of Congress, who asked where TWR stood on a particular subject,” Field recalled. But he persisted in this eclectic approach. “TWR continued to think that presenting a variety of differing points of view better represented the public interest than did selecting a single point of view and insisting on its correctness.”

Field’s thoughts about ideas and information — that more is better, that debate is good, that rigid consistency is overrated and probably counterproductive — may seem unusual for the leader of a lobbying group, but they seem much less unusual, and indeed quite normal, for the publisher of a fledgling policy journal. And that goes a long way toward explaining what happened next.

TWR was never a rousing success. It had several notable achievements, helping kill off a few special interest tax provisions during the legislative drafting process and developing a voting scale that rated members of Congress on their tendency to support reform-oriented tax legislation (both efforts spearheaded by former Tax Analysts board member Thomas Reese).

But the organization’s ideological heterogeneity made it a hard sell on Capitol Hill, and funding proved to be a constant challenge. Perhaps most importantly, Field realized that TAA could do what TWR was doing. TWR was trying to provide balanced, expert, nonpartisan tax information to Congress, while TAA was trying to provide exactly the same sort of information in the pages of Tax Notes. There was really no need for separate organizations. During the last few years of the 1970s, TAA gradually absorbed most of TWR’s functions, and by 1980, Tax Analysts had emerged in something like its current form.

Field’s creation had changed over its first decade of existence. Structural consolidation was only the most obvious transformation. Developing a sustainable revenue model was even more important, ensuring that Tax Analysts would survive the difficult transition from infancy to adolescence that dooms many nonprofits.

And for all the important change, one thing stayed the same throughout the initial decade and beyond: Field’s faith in the power of information. He set out to challenge the dominance of special interests in the making of tax law. From the start, he understood that information — fair, honest, evenhanded, unbiased information — was one of the most powerful weapons in the battle against special privilege. That’s an insight that remains at the core of the Tax Analysts’ mission even today.