By Oliver Olsen
Posted April 5, 2007
Overshadowed by the media focus on USA PATRIOT Act abuses, one of the most significant threats to our personal privacy is only months away from implementation — right here in Vermont.
Starting this summer, property tax credits will become a matter of public record. Coupled with property tax data that is already in the public domain, this information will enable the calculation of household incomes with a very high degree of accuracy and certainty.
This is the result of Act 185, a well intentioned, but flawed attempt at simplifying Act 60/68. Under the new law (passed last year), homeowners who receive property tax adjustments under the income sensitivity program will no longer receive a prebate or rebate check. Instead, this money will be transferred to the municipality as a credit towards the homeowner’s property tax bill, thus creating the perception of a lower tax bill.
So exactly how does this change expose your household income?
As an analogy, think of a safe deposit box that requires two keys to open. Your personal information (household income) is inside the box. The amount of your gross property tax bill is one key needed to open that box. The bill has always been a public record, so this “key” is already available to the public. But since two keys are required to open the box, your personal information has been secure.
The amount of your rebate/prebate adjustment is the second key. Up until this year, the Vermont Department of Taxes has kept that “key” from prying eyes because prebate and rebate data have been considered confidential information — and with good reason.
With the passage of Act 185, that second “key” will appear as a credit on your tax bill. Two keys in the public domain mean that anyone paying a visit to the town office will have the necessary information to “open the box” and calculate your household income.
Just as the tax department uses an algebraic formula to calculate your prebate/rebate based on certain variables (namely your household income and gross property tax bill), you can substitute variables and work backwards from the credit and gross property tax bill to calculate household income.
In recognition of these concerns, two members of the Vermont House have introduced a bill — H. 367 — that would rectify this issue, by providing taxpayers with the ability to “opt out” of the new system, and receive a check directly from the tax department, thus maintaining the confidentiality of their data.
The two co-sponsors of this bill, Rep. Rick Hube, R-Londonderry, and Rep. Chris Pearson, P-Burlington, the leader of the Progressive Caucus, may seem like strange bedfellows. But while these gentlemen represent differing political viewpoints, they, along with most Vermonters, value our right to privacy.
Unfortunately, H. 367 does not have the support of legislative leaders, and it is unlikely to see the light of day any time soon.
Opponents of the bill dismiss privacy concerns and take the myopic view that it will be impossible for a nosey neighbor to “prove” what his neighbor’s household income is with 100 percent certainty.
It is true that nobody will know with 100 percent certainty what someone’s household income is. Since Vermont income tax refunds can now be applied towards a property tax bill, there is no way to know for sure whether the property tax credit is based solely on a rebate/prebate, and thus an unknown variable is introduced to the equation.
The reality is that very few people will forgo an immediate income tax refund in favor of receiving a credit on their property tax bill six months later. One tax preparer I spoke with stated that none of his clients had availed themselves of this option, and that he didn’t expect any to do so. So while you won’t be able to calculate household income with 100 percent certainty, it will still be pretty close.
However, those who evaluate the issue in a provincial context are missing the bigger picture. By debating whether an individual can estimate his neighbor’s income with 100 or 95 percent probability of certainty, we focus on one of the least onerous impacts of Act 185. We should be concerned about organizations that that will use this information on a grand scale.
So, what organizations would be interested in this data?
Well, for starters, commercial data miners and direct marketing firms who gather, analyze, and resell personal data on the open market to telemarketers, financial institutions, and background investigation firms. The result: more telemarketing calls and junk mail targeted to your income profile, courtesy of the State of Vermont.
But the most insidious use of this data will be by political parties. Consider just a few hypothetical scenarios.
A political party or candidate could identify everyone with a credit on their tax bill and develop a telemarketing campaign to trumpet the virtues of income sensitivity under Act 60/68. They don’t need 100 percent accuracy. They can focus their energy (and money) on voters that will be most receptive to their message, while ignoring those that might not be. Even if 5 or 10 percent of their calls hit the wrong audience, they’re way ahead of the curve.
A political party could also use that same data to identify individuals who don’t have a credit on their tax bill, and send them all fundraising letters. They would be safe in the knowledge that most recipients will have household incomes in excess of $110,000 per year, and thus have a little more discretionary income to contribute.
While Act 185 was well intentioned, the implementation will have significant consequences that deserve serious attention.
Oliver Olsen lives in Jamaica. This op-ed first appeared in the Brattleboro Reformer and is reprinted here with permission of the author.