There is no law that says that a presidential candidate must release his or her individual tax returns to the public, but at least one member of Congress thinks there should be. Senate Finance Committee Ranking Member Ron Wyden (D-OR) has introduced a bill that would require presidential nominees to release recent tax returns.
The bill, called the Presidential Tax Transparency Act, would require a presidential candidate to release the most recent three years of tax returns to the Federal Election Commission (FEC) within 15 days of becoming the nominee at the party convention. If the candidate refuses to comply, the Treasury Secretary would provide the tax returns directly to the FEC for public release.
Let that last part sink in for a minute.
Sen. Wyden said, about the bill, “Since the days of Watergate, the American people have had an expectation that nominees to be the leader of the free world not hide their finances and personal tax returns.”
I happen to agree with him.
Sen. Wyden continued, “Tax returns deliver honest answers to key questions from the American public. Do you even pay taxes? Do you give to charity? Are you abusing tax loopholes at the expense of middle-class families? Are you keeping your money offshore? People have a right to know.”
I happen to agree with him on that, too.
When presumptive GOP nominee Donald Trump suggests that the public has no interest in what’s in a candidate’s tax returns, saying “[t]here’s nothing to learn from them,” I disagree. I believe that there is much that can be learned from a person’s tax returns. As I noted earlier:
…a tax return is not just a bunch of numbers. It’s a snapshot of your financial life. Not only do you have a better understanding of where taxable income comes from (like Buffett, I suspect much of Trump’s income is tax favored), you can see potential failures in losses (although you can lose money on paper and still win at tax time) and worrisome positions with investments and loans. You also have a picture of what a taxpayer might find important. When it comes to taxpayers who itemize, you can learn about charitable deductions (not simply how much but where it’s distributed), real estate taxes (abatements, for example), real estate holdings and more. You can also glean information about the existence offshore accounts, household employees and other holdings.
That’s why we tend to keep our own returns private – we don’t want our neighbors knowing our business. But presidential candidates play by a different set of rules. We want to know what’s important to them, where their money is coming from, and whether they are linked to or beholden to other people or entities. Under the Ethics in Government Act and Federal Election Campaign Act, certain disclosures are required for candidates for federal office (as well as other high-ranking officials and staff). Those disclosures include information about income, gifts, assets, liabilities, outside employment, trusts, and more (downloads as pdf).
I do think that Trump’s refusal to release any of his income tax returns sets a dangerous precedent. Once one candidate refuses, I think it will embolden future candidates. And I think that’s bad for the process.
But I also understand his refusal. As I’ve noted before, under the circumstances, I wouldn’t advise my client to release tax returns while under an audit. I think it’s clear that once the returns are made public, they’ll be picked apart by Trump’s competitors and by the voters he’s currently wooing: it’s the equivalent of millions of armchair auditors. Speaking as a tax attorney, holding those returns until the audit is complete isn’t a bad defensive strategy.
Trump has also said about his tax rate: “It’s none of your business.” Again, I disagree with him. Voters want to know as much as possible about their candidates. That’s why, since the 1970s, most presidential candidates have voluntarily released their tax returns to the public.
You can see more on historical presidential candidate returns, including those from 2016 (Trump excepted) as part of the Tax Analyst’s Tax History Project here.
Compelling the release of those tax returns by statute, however, is worrisome. Currently, we have incredibly strict privacy laws when it comes to our individual tax returns. Those privacy protections extend to all taxpayers – even presidential candidates. I don’t see the value in changing those rules. Voluntary disclosures should be enough. To be clear: I don’t want a president with secrets but neither do I want a police state.
You can read the text of the bill here.
