The Republican Party’s war on information may have a new casualty: corporate income tax disclosure. The appropriations plan released by House Republicans this weekend threatens to withhold funding for an obscure but vital financial oversight board because that board now requires corporations to disclose basic information about their income tax payments (or lack thereof).
The House Appropriations Committee’s fiscal year 2026 spending bill allocates $2 billion to the Securities and Exchange Commission (SEC). This would be a 7 percent cut from 2025, and it would come with strings attached. The bill prohibits the SEC from approving the budget for the Financial Accounting Standards Board (FASB) — the entity deputized by the SEC to monitor the disclosures made by publicly traded corporations to their investors — until FASB stops trying to require detailed income tax disclosures by these corporations.
By way of background, FASB exists because publicly traded corporations lie to their shareholders, and accounting firms can’t be trusted to stop them from doing so. It was created in 2002 by the Sarbanes-Oxley Act, which was a comprehensive response to accounting scandals involving Enron, Worldcom, and other major corporations.
As documented in a wildly entertaining accounting documentary, Enron lied to its shareholders about its profitability, and the major accounting firm charged with approving its financial statements signed onto those lies. As a result, both Enron and the accounting firm (Arthur Andersen) collapsed in 2002, resulting in billions of dollars in losses for American shareholders. Congress then quickly enacted the Sarbanes-Oxley Act with virtually unanimous approval. And of course, the SEC itself exists because a virtually unregulated corporate sector plunged America into the Great Depression in 1929.
The lessons learned in 2002 (and in 1929) appear to be completely lost on today’s Congressional Republican leaders who now believe that FASB shouldn’t be allowed to exist unless it lets corporations lie about their taxes.
FASB unveiled new tax disclosure requirements in 2023, which will require companies’ 2025 annual reports to (gasp) disclose their U.S. and foreign income and income tax expense, and to disclose specific tax breaks that significantly reduce these companies’ tax rates. In a 2023 letter to FASB, a half dozen lawmakers argued that forcing companies to disclose their tax rates could allow tax authorities to “heighten their scrutiny” of companies that cheat on their taxes. There’s no public record of whether FASB officials responded by awarding gold stars to these members, but heightened scrutiny is precisely the point of these rules.
Americans believe that large, profitable corporations should pay more taxes, and that belief is based on hard data showing that these companies routinely pay far below the advertised 21 percent federal tax rate. The sensible legislative response to this would be enacting laws that prevent corporate tax avoidance. But Republican leaders in Congress appear to believe that the most sensible response to this is to take away the hard data.
