Donald Trump’s tax returns are bound to reenter the limelight — and not just because Paul Manafort and Michael Cohen have put tax crime in the news recently. If Democrats win a majority in either house of Congress during the November midterm elections, they will have the power to compel disclosure of Trump’s tax returns. That possibility seems very likely to figure prominently in the fall campaign.
Ever since Trump’s victory in 2016, critics have been warning about his apparent conflicts of interest, insisting that the president’s complex financial life makes conflicts almost a certainty. As a partial solution, these critics have continued to call on Trump to voluntarily disclose his tax returns. The president, however, has shown no sign of changing his position. Having refused to release his returns while running for the White House, he remains unwilling to release them while in office.
New Legislation
Sen. Elizabeth Warren, D-Mass., proposed a legislative resolution to this standoff. Her Anti-Corruption and Public Integrity Act, introduced last week, would require presidents (as well as vice presidents and members of Congress) to release their tax returns. As my colleague Stephen K. Cooper has explained, the legislation would require the IRS to release eight years of federal tax returns for presidential and vice presidential candidates, and two years of returns for congressional candidates. (Related coverage: p. 1330.) Officials already in office would also be required to make annual disclosures. Notably, to highlight the case of Trump, the law would also require return disclosure for businesses and nonprofit organizations owned or run by candidates for federal office.
In an interview with National Public Radio’s All Things Considered, Warren said her legislation was “designed to make sure that when someone is in Washington working in the public interest, that it’s really the public interest they have in mind and not their next fancy job working for a lobbying firm or the stock that they hold in their portfolio. If you want to come work for the public, then you’ve really got to work for the public.”
Last week, Warren also made a voluntary disclosure of her own tax returns for the past 10 years. Observers interpreted her release as one of the clearest signs to date that she is planning her own run for the presidency in 2020.
Existing Law
If Warren’s legislation were enacted, it would represent a marked change in disclosure rules for national politicians. However, the prospect of enactment, at least anytime soon, is vanishingly small. NPR asked Warren why she even bothered to introduce it. “Because people understand that we have a problem in Washington,” she said. “Step one is you’ve got to call it out for what it is: corruption. There’s too much power in the hands of the rich and the well connected here in Washington. Number two is you’ve got to show there are ways we could fix this.”
Whatever the symbolic value of Warren’s bill, there are already more practical ways to compel disclosure of tax information. As University of Virginia law professor George Yin has pointed out, section 6103(f)(1) and (4)(A) grant the House Ways and Means and Senate Finance committees and the Joint Committee on Taxation the authority to release individual tax information when it serves the public interest. (Prior analysis: Tax Notes, Feb. 20, 2017, p. 1013.) Taxpayer consent is not required.
This authority to compel tax disclosure dates to 1924, and it played a key role in 1973 and 1974, when President Nixon found himself at the center of a scandal (distinct from Watergate) regarding his personal tax returns. (Prior analysis: Tax Notes, June 13, 2016, p. 1527.) As part of the ensuing investigation, the JCT approved release of the president’s tax returns for 1969 through 1972. (These returns, and those of every president since then, except for Gerald Ford and Trump, are available through the Tax History Project at Tax Notes.)
In Yin’s view, it would be reasonable for Congress to consider disclosing Trump’s tax returns. “Today’s understandable concerns about Trump’s potential conflicts of interest would seem clearly to justify a congressional effort to obtain, investigate, and possibly disclose to the public his tax information,” Yin wrote last year (Yin, “Congress Has the Power to Obtain and Release Trump’s Tax Returns,” The Washington Post, Feb. 7, 2017).
Yin, who served as JCT chief of staff from 2003 to 2005, also suggested that a compelled release would bolster faith in the tax system. “Disclosure would serve the additional purpose of assuring the American public that the new president is not receiving preferential treatment from the IRS,” he wrote. “In the present situation, repeated attacks on the agency have weakened it and perhaps left it vulnerable to undue influence from higher-ups. Full disclosure could disabuse the public of any concern that the IRS is giving the president a free pass.”
However, the Nixon experience revealed that the IRS was not completely reliable when it came to auditing presidents. Nixon had been audited and given a clean bill of health by the agency. Only after details of his tax returns were leaked by an IRS employee did the agency — under the new, more vigorous, and notably more independent leadership of Commissioner Donald Alexander — decide to take a second look.
Will Congress Act?
I strongly suspect that if Democrats win a majority in either house, they will move promptly to investigate and release Trump’s tax returns. It’s not a guarantee, of course; some Democratic lawmakers may be wary of setting a modern precedent for such disclosures, especially since it only requires a majority vote of any of the tax committees. It’s easy to imagine that forced disclosure might become the new normal — a daunting prospect for anyone who thinks he or she might want to run for president at some point.
But given the centrality of the anti-Trump electoral appeal of Democrats — and the hostility to the president evident among the party’s base — it seems hard to imagine that Democratic lawmakers could resist the temptation to make a forced disclosure on Trump’s behalf.
Moreover, many of those same unhappy voters in the Democratic base seem likely to agitate (in the wake of presumed victory) for impeachment. If Democratic leaders are wary of that draconian move, a compelled tax disclosure and accompanying investigation might relieve some of the immediate pressure. Of course, if that investigation reveals any wrongdoing by the president, it would also bolster any eventual drive for impeachment.
Ultimately, for champions of tax disclosure by federal candidates and elected officials, the Warren bill offers a much more promising route to real transparency. Forced disclosure under existing law might cast Trump’s returns into the public eye, but it would be an impossibly cumbersome method of ensuring routine disclosure by national leaders.
However, politics is often a short-term game, and it seems likely that Democrats — should they win in November — will take the easy, more certain route to disclosing Trump’s tax returns.