Operations and Government Information of the Committee on Government Operations, on which I serve, learned in testimony from the Office of the Attorney General and the Department of the Treasury, that these orders were prepared as a prototype for future tax return inspection orders.

As I stated on February 19, 1974:

"These executive orders present the frightening prospect that the administration is attempting to begin the process of making personal income information of whole classes of people available to various departments and agencies without regard to the private nature of the information, or protecting individuals from possible abuse."

Such a development would hardly be a proper safeguard for that right of privacy described by the President as a “cardinal principle of American liberty.” I am pleased to note that after concentrated and sustained pressure from the Congress, the public, a perceptive member of the press-Alan Emory, of Watertown, N.Y., Daily Times-and the IRS itself, this improvident grant of authority has been rescinded by Executive Order 11732 on March 24, 1974. Unfortunately, the chilling specter raised by these orders continues. I am alarmed by the technical capacity of government to retrieve from its computer banks a dossier on individuals combining bits and pieces of data gleaned from many sources. The collection of such information is easily justified as enhancing administrative convenience and efficiency; it is just as easily subverted into a genuine, sinister force. An enlightened public should not quickly forget the articulated desire of an ex-White House official, John Ehrlichman, to make the Internal Revenue Service "more politically responsive."

Potential political operatives zero in on IRS files for the same reason that the Congress must now step in to assure their integrity and continued confidentiality; an individual's tax return contains a wealth of information about his private affairs, his job, his income, his charitable interests, his family responsibilities. The accurate reporting of all of these matters is indispensable to the administration of our Federal tax system. The remarkable candor shown by the American people each April 15 should not be taken for granted. Congress must take immediate steps to guarantee that the information so gathered is not used for any other purpose not specifically authorized by law.

Any statistical data needed by the administrative arm of the Government should be collected by the Bureau of the Census, the body established by the Congress for that purpose. It is interesting to speculate on why, if USDA believed this type of information was vital to its operations, it eliminated from its 1974 budget all funds for a farm census. Administrative efficiency is a goal to be sought in Government. But the possibility of individual tax returns becoming the bedtime reading of politicians or bureaucrats is simply too high a price to pay for it.

I do not presume that such was the intention of those in the executive branch who supported this relaxation of the confidentiality of IRS files. But the classic atmosphere of personal privacy is a political climate in which each person decides for himself what personal information he will share and with whom he will share it. And as Mr. Justice Brandeis said:

"The greatest dangers to liberty lie in insidious encroachment by men of zeal, well meaning but without understanding."

I wish to make a part of the Record several news stories on this controversy written by Alan Emory of the Watertown, N.Y., Daily Times: [The articles follow:]

[From the Watertown (N.Y.) Daily Times, Oct. 29, 1973]

FARM TAX SNOOPING SCRAPPED

(By Alan Emory)

WASHINGTON.-The Agriculture Department has decided temporarily, in the face of a hostile reaction from Congress, farmers and civil liberties groups, to shelve President Nixon's order allowing it to inspect individual tax return of farmers.

Assistant Attorney Gen. Robert G. Dixon, Jr., had said the order was drawn up as a model so that tax returns could be used for statistical purposes by other federal agencies. He insisted there was no intent to invade farmers' privacy because the department wanted only "group data" and not data on individual farmers "which would certainly be a matter of great concern."

CONCERNED

"Mr. Dixon should have been greatly concerned," a House Government Operations sub-committee reported, “because that is precisely what the Department of Agriculture was authorized to get."

The Statistical Reporting Service in the department had felt that, despite steadily refined programs of reporting by farmers, still greater precision was necessary. It obtained from President Nixon an executive order-in broad language in January and modified in March—allowing the Agriculture Department to obtain names, addresses and gross income or product sales of farmers from Internal Revenue Service records.

Ironically, the IRS itself had strongly opposed providing personal information from tax returns.

Although the Nixon order affected 3,000,000 farmers, no public or press announcement was made by the White House or the Agriculture Department. The order and regulations were published in the Federal Register, which, one farm spokesman said, was "not every-day reading for the average farm family." No farm leaders were consulted.

DATA VITAL?

Rep. Bill Alexander, D., Ark., said if the data were vital to Agriculture Department operations, as claimed, then President Nixon would not have wiped out farm census funds from his fiscal 1974 budget.

Several congressmen and IRS officials favor giving the Agriculture Department names and addresses of farmers and letting the department ask the farmers for the financial information sought.

"No one asked a single farmer whether he was willing to share this personal financial information with the department," Alexander said.

He asked whether the order would prove a model for the Commerce Department to inspect tax returns of businessmen, the Housing and Urban Development Department to examine returns of homeowners receiving government-insured loans, the Labor Department to look at wage earners' returns or the Health, Education and Welfare Department to pry into returns of doctors and teachers. Dixon said the Justice Department was not requested to express "any policy judgment," and it did not. Alexander called this a "blatant disregard for the rights of private citizens."

HEALTH PLANS

J. Richard Grant, an official of the Statistical Reporting Service, said that the opposition had halted any department plans to pursue access to farmers' data with the IRS "directly."

In an interview, he said that the department had no access to "individual names and addresses" through census data and deplored the "misinformation" about department need for the details and what would be done with them.

Donald O. Virdin, former IRS disclosure staff chief, told the House panel, headed by Rep. William S. Moorhead, D., Pa., that it would be "no problem" to provide the Agriculture Department quickly with names and addresses of the 3,000,000 farmers "if that is all Agriculture wants."

The committee said most farmers would probably be glad to furnish the information if they knew how it would help them and they were assured it would be kept confidential and used just for statistical purposes.

The Justice Department had said that the original, broadly-worded Nixon order that was later changed, "was prepared by the Department of the Treasury-as a prototype for future tax return inspection orders."

Alexander called that a "frightening prospect that the administration is attempting to begin the process of making personal income information of whole classes of people available to various departments and agencies without regard to the private nature of the information."

The House Government Operations Committee recommended that the IRS give the Agriculture Department only names, addresses and taxpayer identification numbers and no personal financial data unless the individual voluntarily consented in writing after an Agriculture Department request.

Several congressmen are drafting legislation making tax returns explicity confidential, with the only loophole approved by Congress.

[From the Watertown (N.Y.) Daily Times, Feb. 26, 1974]

ISSUE OF FARM INCOME TAX INSPECTION TO BE TURNED OVER TO NEW COMMISSION

(By Alan Emory)

WASHINGTON.-President Nixon says the issue of his controversial executive order allowing the Agriculture Department to inspect key features of individual farmers income tax returns will be turned over to a new federal commission on privacy headed by Vice President Ford.

The President was asked at his Monday night news conference how he explained the executive order-and a Justice Department opinion saying it should serve as a "a model" for all executive departments-in the light of his strong defense of confidentiality for White House papers and his new protection-of-privacy policy for individual citizens.

Nixon conceded that he had not specifically raised the question of tax returns in his privacy message Saturday, but he wanted it considered, along with credit bureau computerized files on individuals.

Not only business concerns, but the federal government itself has taken action that could "impinge" on privacy, Nixon admitted.

The President said the whole question should be considered by his new commission.

Nixon, however, did not offer to withdraw the order which has drawn sharp criticism among farm groups and in Congress, nor did he comment on the Justice Department opinion, which many observers believe opens the door for widespread abuse of income tax return confidentiality by a host of federal agencies.

The Internal Revenue Service had objected to the Nixon order, issued early in 1973 and then slightly modified.

[From the Watertown (N.Y.) Daily Times, Feb. 28, 1974]

IRS IGNORES NIXON ORDER ON FARMERS TAX RETURNS

(By Alan Emory)

WASHINGTON.--The Internal Revenue Service has indicated privately it will not enforce President Nixon's executive order authorizing Agriculture Department examination of key parts of farmers' individual income tax returns. However, Agriculture Secretary Earl L. Butz has twice refused congressional requests to shelve the order.

President Nixon said Monday night that the wisdom of the order—which the Justice and Treasury Departments say will serve as a "model" for other federal agencies would be studied by a new commission headed by Vice President Ford. Rep. Jerry Litton, D., Mo., who uncovered the order, held hearings on it and is sponsoring legislation to tighten IRS rules about allowing others to see tax turns, said the measure had a "good chance" in the House Ways and Means Committee.

He said the IRS was supporting the legislation, but unofficially, since it conflicted with the executive order.

Litton said, in an interview, Nixon's move amounted to authorizing the Vice President to determine whether action Nixon himself had taken was "proper." The Congressman said that was "strange," since the President had not given Ford much authority in any other field.

When Litton originally introduced legislation to kill the Nixon order, but permit the Agriculture Department to obtain just farmers' names and addresses, the department cold-shouldered the idea and would not even comment on it. After Litton sponsored his measure to tighten the IRS rules about who could see tax returns, however, the department indicated an interest in the first bill. Litton said he had been surprised when listening to President Nixon's State of the Union message, to hear "a man who proposed opening up 3,000,000 tax returns talking about privacy."

Litton said the Agriculture Department had been asked if it placed so much importance on getting facts that it needed tax return details, and officials said it

did.

37-583-74-pt. 2-23

If that were true, he then asked them, why were funds for an agricultural census struck from the budget.

"I have yet to get an answer," he told a reporter. "The census form goes to every farmer. A tax return sampling would not be as complete. Either they need the information or they don't."

According to Litton, the first request for the order on tax returns went to George P. Shultz, then director of the Office of Management and Budget, but nothing happened. Three years later the order was drafted at the Treasury Department, where Shultz was secretary.

"Why wait three years and then give the Agriculture Department broader authority than it asked for?" Litton asked. "The department did not want to look at the tax returns, but the executive order not only authorized it to, it spelled out how the department should do it."

Litton recalled that former Nixon aide, John D. Ehrlichman, had promoted a policy of making the IRS "more politically responsive" and theorized that the administration wanted the order on farmers' returns because "if they could get away with that they could try another field later."

The Congressman said the House Government Operations Committee, as well as one of its subcommittees, had asked Butz to hold up on implementing the executive order and that he refused.

[From the Watertown (N.Y.) Daily Times, Mar. 1, 1974]

IRS STILL OPPOSES SCRUTINY OF RETURNS
(By Alan Emory)

WASHINGTON.-The split within the Nixon Administration over opening up individual income tax returns is coming closer to the surface.

Internal Revenue Commissioner Donald C. Alexander, plainly uncomfortable over an executive order by President Nixon designed to allow all federal agencies a shot at individual returns says he is insisting his agency "guard the taxpayer's right of privacy."

The Nixon order, issued last year without a public hearing or any notice is drawing increasing fire in Congress, from farm groups-since it applies to Agriculture Department inspection of individual farmers' returns and civil liberties organizations.

Rep. Bill Alexander, D-Ark.—no relation to the commissioner-one of the first to uncover the order and ask for Congressional action calls it a "massive invasion of the rights of privacy of an entire class of Americans" and "an extremely dangerous precedent to all other groups of citizens of whatever occupation."

Despite the Nixon order Commissioner Alexander revealed in a letter to Rep. William S. Moorhead, D-Pa., his agency is limiting "a mailing list of names and addresses of farmers."

Alexander said he supported legislation to make tax returns "explicitly confidential" except for tax administration and enforcement-a House Government Operations subcommittee on foreign operations and government information. Moorhead is the sub-committee chairman.

Alexander says tax returns should be "confidential and private" unless Congress "clearly specifies" to the contrary.

He said the IRS was barring tax returns to outsiders except where there are "sound reasons" for their availability, and it was "consistently applying such a disclosure philosophy" while working toward a goal of "ensuring the confidentiality of federal tax return data."

Alexander said his policy on inspection of farmers' tax returns by Agriculture Department officials was to limit access to names and addresses. The sub-committee recommended that no personal financial data from the returns should be provided unless individual taxpayers gave their voluntary consent "in writing." "Ideally," the sub-committee said, "the farmers could provide this information directly to the Department of Agriculture."

The IRS says that in the first half of 1970 it made 14,000 tax returns available to the Department of Justice and Labor, the Federal Communications and Securities, the Exchange Commissions, the Federal Home Loan Bank, Renegotiation, the National Labor Relations Board, the Small Business and Social Security Administrations and the Post Office Department.

The House Ways and Means Committee is expected to start hearing soon on a series of bills to protect tax returns sponsored, among others, by Reps. Jerry Litton, D., Mo.; Charles Thone, R., Neb.; Jack F. Kemp, R., Buffalo; and Barber B. Conable, Jr., ***Alexander.

[From the Watertown (N.Y.) Daily Times, Mar. 5, 1974]

BUTZ SAYS FARMERS' INCOME TAX RETURN INSPECTION IS A JUDGMENT MATTER (By Alan Emory)

WASHINGTON.-Agriculture Secretary Earl L. Butz says it is "essentially a matter of judgment" whether his department's inspection of individual farmers' income tax returns "involves invasion of privacy."

Butz made the comment in a letter to Rep. William S. Moorhead, D., Pa., chairman of a House Government Operations sub-committee. The sub-committee had asked Butz to shelve using the access to the tax returns until after it had completed its inquiry into the issue.

President Nixon last year issued an executive order allowing the income tax inspection without any public notice or hearing. It was published in the Federal Register.

The Justice and Treasury Department say it was designed as a model for all the executive agencies.

Ironically, when former Agriculture Secretary Clifford M. Hardin originally requested, in 1970, certain farm data that could be matched with names of farm operators obtained from sources outside the Internal Revenue Service he said specifically he was not seeking an examination of individual tax records.

Butz told Moorhead in June, 1973, that "no employee" of his department would examine any individual tax return under the authority of the Nixon order, but he refused to put the authority in cold storage.

"The list development procedure we have in mind is clearly in the public interest," he insisted.

In July he told Moorhead that the "effectiveness of the security handling of data" by the staff of his Statistical Reporting Service “has not been challenged."

PAARLBERG COMMENTS

Don Paarlberg, director of agricultural economics for the department, said the department had never sought the inspection authority and maintained the original draft had been broadened during reviews by the Treasury and Justice Departments.

Last June Assistant Attorney Gen. Robert G. Dixon, Jr., said, "The original order was prepared by the Department of the Treasury in language designed to serve as a prototype for future tax return inspection orders."

A modified order, he said, was "approved as to form and legality." Paarlberg conformed the broad intent of the order by declaring, "We understand the first order was designed as a model to be used by other departments." According to Rep. Jerry Litton, D-Mo., author of a bill-tightening procedures for inspecting individual tax returns, even the revised Nixon order leaves a farmer's return "an open book."

It authorizes examination of tax returns to obtain any information so long as it can be construed to mean "a measure of size of the farming operation of the taxpayer," he said in a letter to the House Ways and Means Committee.

Rep. Charles Thone, R-Nebr., author of another tax return safeguard bill, says there would be a lot less exposure of returns if the Agriculture Department obtained its statistical data from the Census Bureau as authorized by the White House.

At one point in last year's hearings, Paarlberg commented, "We do not care which department they come from."

"I do very much," Thone snapped back.

Litton, who was curious as to why Nixon had issued the order if the Agriculture Department had not asked for it, recalled that when it was being worked up, a couple of Watergate figures were active in the Treasury Department.

One was G. Gordon Liddy who master-minded the break-in of Democratic National Committee headquarters and had been employed in the office of general counsel, and another was John Caulfield, who was a staff assistant to the