What kind of personal financial information should Congress be allowed to release?

On Friday, the House Ways and Means Committee released former President Donald Trump’s tax returns for public view, an action that is tougher to justify with Trump out of office, and that raises fair questions about what kind of personal financial information Congress should be allowed to release against the will of the president or any other U.S. citizen. But the committee did discover something significant: In 2017 and 2018, the Internal Revenue Service just never got around to auditing the president, an action required by law — years when the IRS was headed by Obama’s man, Commissioner John Koskinen, and by an interim commissioner.

A Taxing Affair

It would be good if all presidential candidates released their most recent tax returns. The power of the presidency is unequaled, and if you want to be the man with all that power, you have certain obligations to the public. The American people have a right to know where a candidate makes their money, at least in the most recent years, as well as where they’ve invested their money and where their financial interests lie. The American people are also free to shrug and ignore this information; there’s no guarantee that all disclosed information will be deemed consequential by the public. But it is better for the people to have too much information about their leaders than too little.

I’m less certain that a president should be legally required to release their tax returns, which is a different question. Presidential candidates are already required to file an annual financial-disclosure report with the Federal Elections Commission within 30 days after becoming a candidate, or by May 15 of that calendar year, and file it each year they are a candidate. It is worth noting that the FEC report requires candidates to report the value of assets in broad ranges, so it’s tough to nail down a candidate’s precise wealth. This made getting a handle on Trump’s finances particularly difficult, as his 2015 report listed some assets as “more than $50 million” with no upper limit.

If Congress wants the public to have more information about presidential candidates’ finances, it could pass legislation making the FEC financial-disclosure reports more detailed, and with more narrow ranges for assessing the value of assets, etc. But your tax return reveals . . . well, almost everything: taxes paid and tax rate, deductions and credits claimed, charitable donations, debts claimed, offshore assets, and so on. Maybe the public is better off knowing that Bill Clinton’s itemized deductions assessed the fair market value of his used underwear that he donated to charity at two dollars per pair. But it’s reasonable, and not necessarily shady, for a presidential candidate to believe that some small details on their tax return don’t need to be revealed to the whole world — just as we need an accurate and sufficient assessment of a president’s health, but maybe don’t need complete reports on their hemorrhoids.

Our system of taxation depends upon the citizen’s revealing all the required personal financial information to the government to determine how much in taxes is owed, and on paper, the Internal Revenue Service is obligated to keep that information confidential.

I say “on paper,” because there have been some particularly egregious and high-profile violations of these rules. Billionaire Ken Griffin recently sued the IRS and the Treasury Department over the “unlawful disclosure” of his tax information; in June 2021, ProPublica published a slew of revelations after reviewing, in its words, “a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years.” The IRS claims to be looking for the leaker but hasn’t made any progress in about a year and a half. (The IRS leaker is probably having lunch with the still-uncaught Supreme Court leaker.) At the time, I wrote, “You are not permitted to commit a literal crime (disclosing private tax returns) in order to counter a metaphorical one (a tax code you deem unfair).” You would be amazed how many Americans think the reverse is true, that if you feel like something is unjust, it is okay to violate your oath and the law.

According to IRS regulations, “The individual tax returns for the President and the Vice President are subject to mandatory review.” This regulation has been in place since 1977.

And apparently, for a few years there, the IRS decided, “Eh, we’re just not going to do that”:

After the vote, the [House Ways and Means] Committee revealed that the Internal Revenue Service did not audit Trump’s returns during his first two years in office, despite a rule mandating such reviews, and never completed any audits while he served.

The IRS began its first audit of Trump’s returns on the same day that Ways and Means Committee Chairman Richard E. Neal (D-Mass.) sent a written request in April 2019 for the information and then assigned the bulk of the work to just one agent, the panel said.

Democrats on the committee said their investigation suggests Trump had not been correct in claiming during his 2016 campaign that he could not release the records himself because of an ongoing IRS audit. They also urged Congress to adopt a new law ordering mandatory IRS reviews of presidential taxes and the public release of some information.

That IRS’s inaction came despite the fact that Trump’s tax forms raise serious questions about how he used deductions to avoid paying taxes in some years, according to a separate report released on Tuesday by the Joint Committee on Taxation.

Note that until November 2017 — ten months into Trump’s presidency — the commissioner of the IRS was John Koskinen, nominated by Barack Obama and confirmed in a party-line vote by Senate Democrats, overcoming fierce Republican opposition back in 2013. The IRS had an acting commissioner, David Kautter, for nearly a year after Koskinen’s departure. Trump didn’t get his own selected commissioner in Charles Rettig until October 2018; it appears that the first audit of Trump’s returns started in April 2019 on Rettig’s watch.

The House Democrats’ report said that in their meetings with the relevant agencies, “IRS and Treasury attendees declined to answer the majority of committee staff questions.” It certainly sounds like the IRS and the Department of the Treasury feel like they are managing things just fine, and want Congress to stop nagging them with annoying questions like, “Hey, how does this whole presidential-audit system work?” or “How do we know you’re doing what you say you’re doing?” or “If you guys are the watchdogs over everyone else, who’s watching you?”

The House Ways and Means committee also voted to release Trump’s tax returns yesterday, and it’s fair to ask: What is the point of that release? This whole time, Neal and congressional Democrats have insisted that it wasn’t a fishing expedition, and that they aimed to investigate whether the IRS handled presidential tax returns appropriately. They have their answer: The IRS wasn’t doing its duty. Mission accomplished. The details of Trump’s tax returns were never all that relevant to the question of whether the IRS was doing its job.

Are Neal and congressional Democrats contending that Trump has committed tax fraud? Then this is a matter for the IRS and federal prosecutors, not the general public. Richard Neal can’t charge Trump with a crime. You and I can’t charge Trump with a crime.

Neal insists he and other congressional Democrats are not being “punitive” or “malicious,” but the story looks simple: Trump doesn’t want his returns released and congressional Democrats want to release them — and have the power to do so.

You know who argued that the House Democrats should not release Trump’s tax returns?

Washington Post columnist Jen Rubin:

When Neal and his committee were defending their request in federal court, they successfully argued that the plain letter of federal law allowed them to obtain the returns, as long as they demonstrated a legitimate legislative purpose. District Court Judge Trevor N. McFadden agreed. “Congress’s power to investigate ‘is inherent in the legislative process’ and serves as an ‘adjunct to that process,’” he wrote in 2021, and listed legitimate purposes: “the administration of existing laws,” “proposed or possibly needed statutes” and “surveys of defects in our social, economic or political system.”

At the same time, McFadden cautioned that “Congress may not expose someone simply ‘for the sake of exposure.’” . . .

[The committee] would do better to heed McFadden’s warning: “If Chairman Neal’s true interest in the former president’s tax returns is indeed to better understand the Presidential Audit Program, he will doubtless be able to accomplish this objective without publishing the returns.” He added, “Anyone can see that publishing confidential tax information of a political rival is the type of move that will return to plague the inventor.”

Democrats’ purpose to evaluate the IRS might have been valid at one point, but Trump did, in fact, run out the clock. If Democrats wanted to enact legislation obligating presidents or presidential nominees to release their tax returns, they should have done so. They failed. It’s also inexplicable that Congress passed no legislation to implement the emoluments clause. Democrats missed their opportunity to prevent financial corruption.

Releasing Trump’s tax returns now has all the appearance of petty payback. I’m hard-pressed to think of any legislative proposal that might come from the returns, let alone from their public release. It’s not clear that Neal and the committee can think of one, either. Will they propose legislation in the waning days of this session?

Congressional Democrats went looking for a Trump scandal and came back with an IRS scandal. Releasing Trump’s returns, just because they can, looks like a middle finger to the former president (and to Judge McFadden, for that matter).

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