Congress

Senators' Tax Loophole Requests Will Get Special Vault


Senators' Tax Loophole Requests Will Get Special Vault

Photo illustration by 731; National Archives: Corbis

At the National Archives, the massive repository in Washington that stores government records for safekeeping, visitors and staffers alike carry a card that tracks their movements. “We have guards with guns, too,” says Richard Hunt, head of legislative archives. These precautions aren’t quite good enough for a big secret Senate Finance Committee leaders want the archives to keep hidden from the public’s sight.

Max Baucus, a Democrat from Montana, and Orrin Hatch, a Utah Republican, are working on the first rewrite of the tax code since 1986. Instead of revising the existing tax law, they’re taking what they call a “blank slate” approach. They proposed sweeping away the tax code’s thousands of loopholes, then asked their colleagues to submit written requests for the deductions they want put back in, assuring them that the requests would be kept private. The response: silence. Senators didn’t want word to leak that they’d supported special tax breaks.

It’s easy to see why. Many of the loopholes that have crept into the law—for oil companies, private equity managers, Hollywood—are hard to defend. There’s no way to pretend they help kids, or create jobs. They just go to people and corporations that donate money. So to get lawmakers to hand over their wish lists without fear of reprisals from voters, lobbyists, and other senators, the committee’s staff has come up with a novel way to let senators do their donors’ bidding in secret. In a July 19 memo obtained by Bloomberg BNA, the committee assured senators that their loophole requests will be locked up—physically locked up—for 50 years.

According to the memo, just two paper copies of the requests will be stored in safes on Capitol Hill. Two digital copies will get filed in password-protected computers. Only Baucus, Hatch, and 10 staff members will have access to the documents. Each copy will be given a unique ID number so it can be tracked. Eventually the papers—stamped “Committee Confidential”—will be secured at the National Archives in a special vault, separate from the committee’s other records, until Dec. 31, 2064.

Sean Neary, a committee spokesman, writes in an e-mail that this is “standard operating procedure for all sensitive material.” Not according to Hunt, who’s never heard of regular legislative business going under lock and key for half a century. Kristen Wilhelm, who manages access to legislative records at the archives, says she has no idea where this special vault is supposed to be located. “It isn’t as though we have a bunch of different locked drawers,” she says.

The archives does keep some congressional records secret. The Senate’s internal records are sealed from public view for 20 years. Documents on the president’s nominees remain secret for 50 years, as do the records of Senate investigations. But tax reform is neither. “It just seems really odd to me,” says Rich Arenberg, who worked on Capitol Hill from 1978 to 2009 and now teaches Senate history at Brown University. In the past, he says, senators simply trusted each other.

Assured that their wish lists will be buried, more than 60 senators have now submitted tax proposals to Baucus and Hatch, according to Neary, who says committee staff has received more than 1,000 pages of secret suggestions. “I think it was just a good offer to get people to open up more,” says Hatch. “I’ve had a lot of people open up.” Only in the U.S. Senate would hiding information the public has every right to know be considered “opening up.” Then again, any senator with an idea so potentially damaging to his reputation that it has to be locked away probably wasn’t working for voters anyway.

The bottom line: To get senators to say which tax loopholes they want to keep, a committee promised to lock up their requests for 50 years.

Greeley-brendan-190
Greeley is a staff writer for Bloomberg Businessweek in New York.

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