Joseph J. Thorndike, Tax Notes Federal contributing editor and tax historian, discusses the Supreme Court’s recent oral arguments on the legal cases involving President Trump’s tax returns and financial records.
The interview has been edited for length and clarity.
David Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: supreme review. President Trump's refusal to release his tax returns has been a topic of discussion since 2016, but the most recent discussion could be the most consequential. The Supreme Court recently heard oral arguments in two cases seeking the president's tax returns and financial records.
Here to talk about those cases and the constitutional arguments behind them is Tax Notes contributing editor Joseph Thorndike. He joins me from his home in Charlottesville, Virginia. Joe, welcome back to the podcast.
Joseph Thorndike: It's great to be here.
David Stewart: Why don't you tell us about your work on presidential tax returns over the years?
Joseph Thorndike: We collect tax returns here at Tax Analysts. We've been doing it on and off since the 1990s, but our collection extends way back; certainly to Franklin Roosevelt, but we might have it back to Woodrow Wilson pretty soon.
We have every president since Richard Nixon, with the exception of President Trump. It's our theory that these things have been released into the public record, so we should make them readily available because they're actually hard to get. They're stashed away in presidential libraries, but not anymore. They're all on the Tax Analysts website.
David Stewart: Before we jump into the details of these lawsuits, the oral arguments held in this case were a bit different than what we've seen in the past. How so?
Joseph Thorndike: I don't know how many of our listeners have been to oral arguments at the Supreme Court, but it's pretty exciting. They're in the big august chambers and all the justices are sitting up there in their big chairs. It was nothing like that. They literally phoned it in. In this time of coronavirus, the justices did this by telephone, just like everybody else. It was then live streamed to anyone who wanted to listen.
David Stewart: Could you give a bit of background on the two lawsuits and the two plaintiffs seeking information from President Trump?
Joseph Thorndike: Basically, the court heard two different cases. The first one was sort of a consolidation of a few different cases. It rolled in requests by three different congressional committees — committees from the House of Representatives — that are trying to get access to President Trump's tax returns and other financial records. They're trying to get these materials from the president's accountants and financial advisors over the years — so from third parties. On the one hand, it's sort of like Congress looking for this material case.
Then there was another case that was filed almost immediately, which is a Manhattan grand jury. It was convened by the district attorney there, Cyrus Vance Jr., in which he's conducting an investigation of the Trump Organization, specifically about the so-called hush money payments around the 2016 election that may or may not have been made.
In any case, we don't need to get into the sordid details of all of that, but the grand jury is investigating whether or not there were hush money payments made, which were then claimed on the tax returns of the president as legal expenses in his business records. The grand jury wants to get a look again at tax returns, but also related financial records.
These are really two similar, but quite different, cases. I think what's significant about them is that both of them are asking third parties for materials related to the president — not actually asking for those materials from the president himself.
David Stewart: As you mentioned, President Trump is the first president since Richard Nixon for whom we do not have tax return information. Do we get any clearer sense of the reasoning from President Trump and the administration about why these records shouldn't be turned over?
Joseph Thorndike: Yes, and maybe there's unspoken stuff going on as well. In this grand jury case, the president's lawyer has essentially argued that presidents enjoy temporary immunity from criminal investigation, let alone criminal prosecution, during their term in office.
This is a pretty sweeping claim. The various courts that have looked at this over the last year or so have brought up this famous thing about, "I could shoot someone on Fifth Avenue and no one would hold me responsible." They've asked: Does that really mean that you can't investigate the president if he shoots someone in the middle of Fifth Avenue? The answer to that from the president's lawyers is essentially, yes. You can't investigate that claim. You certainly can't prosecute. You can't even really look into it while the president is the president still.
They also argue that the document requests tend to be too burdensome for the president, too much to ask of a sitting president, distracting him from his duty. That's one set of arguments for why he can't release his returns to the grand jury.
As far as the congressional requests go, this tends to hinge on the question of legitimate legislative purpose. The president and his lawyers argue that these requests from Congress are essentially a form of harassment. They say Congress doesn't have any legitimate reason to ask for this material and that they're just trying to get in the president's head to bother him to disrupt his work.
It really all then comes down to this question of, "What is a legitimate legislative purpose?" Do we need to protect the president from sort of excessive zeal or just like partisan harassment on the part of Congress? That is what the president's lawyers are claiming, and that is really sort of what the argument's hinged on.
David Stewart: Is there any sort of historical precedent for this argument of presidential immunity from investigation?
Joseph Thorndike: There is. There are two cases that sort of loom large. The first is about President Nixon, but not about his tax returns. This was about the Watergate tapes. President Nixon was required by the Supreme Court in an unanimous decision to hand over the Watergate tapes in response to a subpoena. That's one significant one.
The other one was the Paula Jones sexual harassment civil litigation that Bill Clinton faced as president. He was forced to sit for a deposition. The argument there is that it's disruptive for a president to have to hand over documents. Think about how much more disruptive a deposition is.
In any case, they're not actually asking the president to do anything right now. They're asking his accountants and his financial advisors to do some work. The president has sort of jumped into this case, even though he's not a party to the subpoena in this New York grand jury case. He sort of jumped in to try to block it, but it's not actually requiring any work of him. It's actually requiring an effort on the part of the accountants.
These two previous cases do seem to bear directly on this. They were unanimous cases. A lot of people feel like this is a pretty high hurdle that Trump is trying to clear here. You know that the Supreme Court has a record of being deferential to these sorts of requests by Congress and by grand juries.
It's also true in the last year or so, these cases have been looked at by a number of federal courts, including district courts and courts of appeals. All of them have ruled against the president. This is not an easy argument to make in either case for the president, although the justices did seem to find some light between these two arguments.
Going into it, a bunch of people thought, "Well, this is going to be a slam dunk. There's no question that the president is going to lose these and he's going to lose them both." But a lot of people think the court might be signaling a split decision on these two cases, and grant the one from the grand jury.
They would agree with the grand jury and force Trump's advisers to hand over materials to the grand jury. But in some ways, they would not give Congress what they're looking for, at least not right away. They could send it back to the lower courts. They could simply say no. There are a variety of options.
David Stewart: What arguments are the plaintiffs raising in order to try and get access to these? I would assume they're bringing up those two cases. Beyond that, what arguments are they making?
Joseph Thorndike: The congressional argument is simply that the lawyers for Congress say that Congress has the constitutional authority to issue subpoenas. The subpoena is related to a valid legislative purpose, and therefore, Congress has that authority.
In truth, the courts have been deferential to Congress's investigatory powers for the long course of U.S. history. They simply believe that there's not much argument here.
In the case of the grand jury decision, the district attorney for New York has argued that it's a settled issue. I think what he said was this court has long recognized that a sitting president may be subject to a subpoena in a criminal proceeding.
In this case, they're actually saying the subpoena that is directed at the president's third party is clearly legitimate. It is really within bounds, so they feel like there's just no question about a grand jury having the authority to issue this kind of subpoena, even for a president's records and that Congress knows as well.
It really comes down to this question of whether the president has special immunities or privileges while sitting as president. That's the question the court's ultimately going to have to decide.
David Stewart: If the court does decide against the congressional subpoenas, does that have implications on the powers of Congress going forward?
Joseph Thorndike: I think reasonable people can disagree about this. It's interesting to see that people are also looking at the court and trying to figure out if the people who we think of as conservative justices are lining up where they're supposed to line up. And whether the liberals are lining up where they're supposed to line up. By and large, they often do fall into the groupings that you would expect.
But in this case, on the subject of those congressional subpoenas, there was actually a little bit of weirdness going on. Justice Stephen Breyer — who is definitely not thought of as one of the conservatives on the court — expressed some concern about Congress harassing the president.
I think that it's reasonable to worry that a Congress might choose to harass a president by peppering them constantly with document requests, subpoenas of one sort or another.
On the other hand, if you simply say Congress doesn't have the authority to do that sort of thing because it infringes on the president's constitutional rights and gets in the way of the execution of his office, that leaves the president without very much oversight at all. That's a concern that certainly restricts Congress's role in our government. It's also a bit scary to have a branch of government without adequate oversight.
If we're worried about Congress harassing a president, we should have been worried about that for the last 200 years. Congress has been harassing presidents for a long, long time. Presidents by and large seem able to find ways to get their work done while asking their subordinates to also respond to congressional subpoenas.
It's not like they're being hauled up in front of Congress and having to testify. That's not the issue here.
Personally, I'm sympathetic to the idea that the branches need oversight of one another. Congress has a limited arsenal sometimes here, and they need this authority to make requests and demand documents from the president.
I think that it is a balancing act and that is a difficult question for the court at all times. They're trying to find what the right balance is here between protecting the president's prerogatives as the president and protecting Congress's oversight authority. I don't think anyone knows exactly where that line gets drawn.
David Stewart: As you mentioned, Congress has been making requests to the presidents since the beginning. Is there any precedent for something like this where it's seeking personal records?
Joseph Thorndike: That's a good question. I'm not sure I know the answer.
I'm not aware of subpoenas for presidential records. I know that presidents have been investigated for their personal behavior. When President Nixon was investigated for his tax returns, he voluntarily delivered his tax returns to Congress so that they could investigate them, but Congress also requested additional material from the IRS while doing that investigation.
I can't speak authoritatively to all investigations into presidents' personal lives.
David Stewart: Beyond the two cases in front of the Supreme Court right now, there's other challenges trying to seek President Trump's tax returns, correct?
Joseph Thorndike: Yes. There's another case. This one was filed by the House Ways and Means Committee, which is seeking access to the president's tax returns prior to his presidency.
They're seeking those returns from the Treasury department under the committee's authority under section 6103 of the Internal Revenue Code. One subsection of that grants the committee authority to request tax return information about specific taxpayers if it needs that information for its investigations while considering legislation.
It's a fairly broad grant of authority to the committee to request that kind of information, which is in general not information divulged to anyone. A tax return information is very tightly controlled. But the revenue committees in each house of Congress — the House Ways and Means Committee and the Senate Finance Committee — have a very broad grant of authority to ask for tax reform information when they need it to conduct their business.
The Treasury department has said no to that request, arguing that it serves no legitimate legislative purpose. It says the request is political and partisan in nature, and so that the department is not required by the section 6103 to hand it over. In fact, it argues the department is bound to not hand it over because it's also required to protect taxpayer information from unauthorized disclosure.
That was initially a request to the Treasury department. That, too, has become a legal case. It's currently pending, but it is not really moving forward. It's sort of on hold for a while.
It seems unlikely that it's going to be decided or even move forward very far before the election occurs. The election might change things. There may be a different president. There may be a different House of Representatives. There certainly will be a different Congress after this, so we don't know.
But that case is not part of what was decided or was argued most recently.
David Stewart: Turning back to those cases, I assume we're expecting a decision sometime before November. Do you expect this decision to have any effect on the upcoming election?
Joseph Thorndike: Who really knows, right? What's going to affect the election?
Here's an interesting thing about these cases: President Trump has very clearly demonstrated that he is reluctant to have his tax returns become a matter of public record. Every president since Richard Nixon has had their tax returns released to the public, except for Gerald Ford. That's a weirdness we don't need to get into.
But since President Carter, every president has released the returns. President Trump said he would, then changed his mind, and still hasn't done it. He clearly doesn't want to do it.
One thing that's interesting about these sets of cases is that if the court decides that the tax return and financial material must be released to the grand jury, that material will probably never see the light of day again. It will probably not become a part of the public record because grand jury proceedings are secret. The court can require that, and not throw a grenade into the middle of the election, which is probably fairly appealing for the court, I would imagine.
On the other hand, if they decide in favor of the congressional committees that they also have rights to this material, it's actually quite likely that that material would make its way into the public record. That would likely be more of an explosive event.
That being said, we can see why the court might choose to split its decision for pragmatic reasons. It's not clear to me that the president's tax returns are this super explosive thing that's going to like completely upend the election. This has been debated for a long time.
As someone who believes in disclosure and this tradition of presidential tax disclosure, I wish very much that President Trump would choose to release his tax returns. But I'm not convinced that however the court decides on these cases, it's really going to be a huge shift in the political landscape.
We have plenty of stuff going on in national politics right now. Anything besides the current economic situation and the pandemic is likely to be just a blip on the radar. It's just all been overwhelmed.
I just don't think that this carries the same political weight that it once did or that some people still think that it does. I just don't. I'm not convinced.
David Stewart: Well, that's fair enough. Joe, thank you for being here.
Joseph Thorndike: It's been my pleasure.