Americans want to see Donald Trump's tax returns. In a late May poll by the Morning Consult, more than two-thirds of respondents said the presumptive nominee should release his returns to the general public.
But are the voters right? Is the interest in candidates' tax returns actually legitimate? Or is it, as the Trump apologists insist, just voyeurism dressed up in the self-righteous rhetoric of good government?
The correct answer is both. There is an undeniable voyeuristic element to the long-standing tradition of candidate return disclosure. But there are also important reasons why voters have come to expect tax disclosure from presidential candidates, not to mention actual presidents. In both cases, disclosure is voluntary, which is unfortunate. But it is nonetheless vital.
Still, there are good reasons to question the tradition of return disclosure -- and cogent arguments to be made against it. In a recent Tax Analysts blog post, my colleague Ajay Gupta offered several reasons why Trump's refusal to disclose is understandable and perhaps even admirable. They deserve a close look:
1. The audit defense is legitimate. Trump's justification for keeping his returns secret has changed over time, beginning with a common taxpayer lament. Asked in late January if he would release his most recent return, he said it wasn't finished yet. "We're working on that now," he told NBC's Meet the Press. "I have big returns, as you know, and I have everything all approved and very beautiful, and we'll be working that over in the next period of time."
Shortly afterward, Trump changed his story, saying he couldn't release his returns because they were being audited by the IRS. Gupta takes this explanation seriously. "Turns out that unlike most Trumpian excuses, this one is neither trumped-up nor inapt."
That might be true, if we judge candidates by the same rules as everyone else. But we don't. And we can't. Trump's lawyers may think that the public release of a tax return under audit is unwise, and I'm sure they are right (no one wants their audit to be crowdsourced). But that's hardly a general principle of tax practice, because no one except political candidates ever releases a tax return to the general public. Ever.
And there is precedent for releasing tax returns while under audit. Richard Nixon released his returns while the IRS was auditing them in late 1973. And given that every president and presidential candidate since 1976 has also released his returns (with the exception of Gerald Ford), it seems likely that at least some might have been under audit.
The audit defense is apt, but only when applied to the notional release of a tax return by a normal taxpayer. It is not apt when applied to the release of a tax return by a presidential candidate.
And it's worth pointing out that the audit defense, if accepted as valid, would presumably keep Trump's returns secret even if he wins in November. I wonder if everyone cheering the secrecy of candidate returns would be equally comfortable with the secrecy of presidential returns?
2. Legally voluntary, politically compulsory release is unfair to the candidate. Tax returns are private documents. Period, full stop. The protections afforded to personal tax returns apply to candidates and presidents, just like they do to everyone else.
Which is why Gupta seems more than a little outraged by all the moral pressure on Trump to release his returns. "Fair and even-handed application of the revenue laws seems beside the point in forcing waiver of the guaranteed privacy of tax returns by candidates who have not recently, or in Trump's case never, wielded official power."
To my reading, this line of argument suggests that elected officials wielding actual power might reasonably be expected to release their returns. But even if that's not implied, the argument still suggests that candidates owe voters nothing that isn't legally required.
On some level, that's indisputable. But we have come to expect more from candidates than the bare minimum of required legal disclosure. Most notably, we expect them to disclose information about their physical health. And with good reason. As Jeremy Hsu recounted in an article for LiveScience, when Sen. Paul Tsongas ran for the Democratic nomination in 1992, he was suffering from a resurgence of his non-Hodgkin lymphoma. "Had voters elected him president instead of Bill Clinton, Tsongas would have endured crippling cancer treatments and died in office, as he did just a few years later," Hsu wrote ("The Secret Medical Records of Presidential Candidates," May 20, 2008).
Tsongas was hardly the only one. There's a long history of health secrecy surrounding American presidents. As Sandee LaMotte of CNN described recently, Woodrow Wilson concealed his history of strokes (one of which left him wholly incapacitated during much of his second term), and Franklin Roosevelt hid his heart disease (which killed him just a few months into his fourth term) ("Do voters have the right to know presidential candidates' health histories?" Dec. 15, 2015).
As a result, we have come to expect presidents to be forthcoming about their health issues. Which is not to say that every candidate has chosen to make a health disclosure. But increasingly, they do. And they should.
The same could be said of tax transparency. I would prefer if tax disclosure were required of every candidate for federal office as part of their Federal Election Commission filings detailing their personal finances. We would all be better off without the begging, hectoring, and pleading that the voluntary tradition entails.
But in the meantime I think we can still expect candidates and presidents to go beyond the legal requirements and release their tax returns voluntarily. And that means the hectoring is here to stay, at least for a while. Moral suasion is all we've got.
3. The tradition of return release is voyeuristic. As Gupta put it, "the real motivation [for pressuring candidates into releasing returns], of course, is to gain a voyeuristic glimpse into their financial and fiscal souls and compare those with their public personas -- what was their effective tax rate, what deductions they claimed, what charitable contributions they made, and so on."
As I noted earlier, there is something to this objection. But just because the tradition has a voyeuristic payoff doesn't mean that it's not also the right thing to do. After all, the legally required FEC financial disclosures are also voyeuristic in result if not intent. Are we seriously suggesting that we roll back that sort of disclosure too?
And if we're in the business of feeling sorry for candidates, how about some pity for their sacrifice of personal, nonfinancial disclosure? For better or worse, candidates are expected to bare their souls to the electorate. Jimmy Carter famously confessed his imagined infidelity to Playboy magazine. "I've looked on a lot of women with lust," he acknowledged in November 1976. "I've committed adultery in my heart many times."
In similar fashion, today's candidates are expected to lay bare their moral values, religious convictions, and personal behavior. Nothing is too private for the pages of People magazine -- or The New York Times. And candidates are expected to tolerate journalistic investigations probing those issues. Sure, releasing a tax return might require a sacrifice of personal privacy. But candidates long ago abandoned much expectation of privacy. Even Donald Trump seems comfortable with that reality. (In fact, he may be more comfortable living his life under the microscope than any other candidate in recent memory, as long as that microscope can't see through the legal cloak of tax privacy.)
4. Tax returns aren't the only thing needing disclosure. Here's the place where Gupta and I agree. He suggests that the tradition of tax return disclosure is biased against some candidates and possibly against some (conservative) ideologies. He notes the relative silence that greeted the disclosure of problems in tax returns filed by the Clintons' family foundation. He also suggests that Hillary Clinton should be compelled to release the transcripts of some of her paid speeches.
"If obtaining otherwise protected data for testing the validity of a candidate's utterances and his supporters' claims is the reason, why stop at tax returns?" Gupta writes. "Where is the ardor for the transcripts of Hillary Clinton's paid speeches to Wall Street banks -- transcripts that could put the lie to the accusatory tone she now adopts in publicly discussing these banks' role in the global financial meltdown of 2008?"
I agree. Journalists should be clamoring for those transcripts. Disclosure is a good thing, almost always. When an item bears directly on a candidate's honesty, veracity, and competence, it should be released. But that's an argument for more disclosure, not less. Just because we haven't achieved full transparency doesn't make it OK for Trump to give us less. And if we're looking for equivalencies, comparing tax disclosure to tax disclosure leaves Trump on the wrong side of the transparency equation when going against Clinton.
Gupta argues, and I think he's correct, that politics plays a role in demands for tax return disclosure. "When tax return data is in fact disclosed, the nature and level of scrutiny can be dramatically different depending on the ideological affiliation of the candidate," he writes, adding that Mitt Romney got a very hard time for his returns, especially the revelation of his IRA and its Cayman Islands "blocker corporation."
True enough. But would the IRA (and other aspects of the Romney return, like his modest average tax rate) have been such a big deal if Romney hadn't resisted disclosure for so long? By choosing to delay his release until the final months of the campaign, he more or less guaranteed a heightened level of scrutiny.
I suspect that Romney could have defused his personal tax issues in much the same way that Trump has tried to do: by simply acknowledging that he, like everyone else, pays as little as possible.
On this point, I suspect that Gupta and I are not far apart. I find the moralistic grandstanding by Democrats regarding Trump's presumed low (or zero) tax rate to be irritating and counterproductive. The issue should not be the right to tax minimization, which is obvious and well established. Rather, it's the techniques of minimization that matter; as the readers of Tax Notes hardly need to be reminded, not all forms of tax avoidance are equal. The public's interest in seeing a candidate's tax return resides not in some arbitrary, headline figure like an average tax rate. It lies in the methods and techniques of tax avoidance and minimization (and possibly in the level and nature of charitable contributions, which really depends on what claims the candidate has made).
Romney's political problem stemmed not from the details uncovered in his tax returns but in his reluctance to release them in the first place. As is so often true in politics, it was the coverup, not the crime (or the legitimate transaction), that really mattered.
Why Disclosure Matters
Gupta seems to admire the Donald's tenacious stand against tax disclosure. "Trump on the other hand brazenly flouts all media-imposed customs and practices," he writes. "Whereas Romney stood mute as CNN's Candy Crowley interjected herself into the second presidential debate of the 2012 cycle, Trump taunts the media to its face, calling reporters 'sleazy' and 'real beauties.'"
Fair enough. But here's the thing: Trump owes his returns not to the media but to voters. And as noted above, voters want to see them. The Morning Consult poll found that 67 percent favor disclosure. That's remarkable, and it helps explain why so many of Trump's fellow Republicans have echoed the call for release. Those politicians -- who are every bit as craven as Gupta suggests -- understand that the public demand is reasonable.
The tradition of voluntary disclosure is not media-imposed. Rather, it's historically derived, originating in the gross malfeasance of a sitting president who, among other misdeeds, played fast and loose with the revenue laws. In a very real sense, today's candidates are paying the price for Nixon's sins. (Prior analysis: Tax Notes, June 13, 2016, p. 1527.)
The disclosure tradition has gathered moral weight in the four decades since Nixon left the White House, thanks to the voluntary tax disclosures offered up by candidates and presidents in both parties. Those disclosures have turned Nixon's shame into something much more powerful: a norm of voluntary transparency observed by those presuming to seek the highest office in the land.
If this tradition were truly unreasonable, why hasn't someone already flouted it? Romney tried, but even he came to recognize the legitimacy -- or at least the necessity -- of release. The power of this disclosure tradition cannot be laid at the feet of a headline-starved punditocracy. Voters routinely ignore the pundits on a host of issues, from campaign finance to gun control.
The disclosure tradition is powerful because voters believe in it. And in a democracy, that matters.