Grassley Raises Public Disclosure of Some Corporate Tax Returns
WASHINGTON – Sen. Chuck Grassley, ranking member of the Committee on Finance,today asked two federal agencies to analyze whether key information from the tax returns of publiclytraded companies should be public.
Grassley asked Treasury Secretary Paul O’Neill and Securities and Exchange CommissionChairman Harvey Pitt to describe whether the disclosure of key tax information would help thefederal government police corporate practices and allow shareholders and the public to bettermonitor corporate transactions.
This is the latest of Grassley’s efforts to improve corporate accountability. Last week, heurged the Securities and Exchange Commission and WorldCom, Inc. to provide details of millionsof dollars of bonuses that news reports say top company executives received before the company’scollapse. He said managers who knew about the company’s accounting gimmicks should return theirbonuses to help keep the company viable.
The text of Grassley’s letter to O’Neill and Pitt today follows.
July 8, 2002
The Honorable Paul O’Neill
Department of the Treasury
1500 Pennsylvania Ave. NW
Washington, D.C. 20220
Mr. Harvey Pitt
Securities and Exchange Commission
450 5th St. NW
Washington, D.C. 20549
Dear Secretary O’Neill and Chairman Pitt:
The nation’s workers and small shareholders have been shaken by the almost dailyrevelations of corruption and malfeasance in corporate boardrooms. My own state of Iowa hasthousands of employees whose employment at WorldCom has now been placed under a shadow.
I am writing to raise the question of whether the information contained in the corporate taxreturns of publicly traded companies could be of benefit to government regulators as well asshareholders and workers. Given recent events, it is important that we have a thoughtful discussionof this matter. Specifically, would there be a benefit to efforts to police corporate governance andproviding a more accurate picture of a corporation’s financial health of requiring corporate taxreturns (or a summary version) to be available to the Securities and Exchange Commission (SEC)?
In addition, would there be a benefit to shareholders and employees of requiring corporate tax returns(or a summary version) to be publicly available?
I recognize the need to balance the benefits of greater openness with possible pitfalls. Forinstance, proprietary business data would understandably need to be safeguarded. To that end, Iwould appreciate your highlighting any drawbacks you see to such a proposal (example, legitimateconcerns of business planning) with possible solutions or responses to those concerns (example,providing to the public a summary that will be informative but will still protect confidential businessinformation).
In addition, I would appreciate your views on whether sufficient tax information is alreadypublicly available. Commentators have stated that the tax puzzle of a corporation can be put togetherfrom SEC filings, annual reports, etc. However, we saw with the Enron Corp. many analystsproviding an estimate of taxes paid, or not paid, that were wildly contradictory.
Thank you for your time and assistance in this matter. Given the Senate’s debate on thesematters, I would appreciate a response within 14 days. If you have any questions, please contact Mr.Dean Zerbe of my staff at (202) 224-5315.
Charles E. Grassley
cc: Chairman Baucus
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