Supreme Court rulings on Trump taxes show we need tougher presidential transparency laws

We must stop obsessively focusing on all the different ways courts can try to pry Trump's tax records from his grip and instead pass legislation to require it.
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President Donald Trump arrives to speak at a press conference on Capitol Hill on May 19, 2020.Brendan Smialowski / AFP - Getty Images
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By Joseph J. Thorndike, director of the Tax History Project at Tax Analysts

President Donald Trump has been fighting to keep his tax returns secret since, well, forever. And because tax returns are legally protected from public disclosure by all sorts of scary laws with heavy penalties, the president has been winning that fight.

Until Thursday.

Apparently, lots of people seem to think that just because a grand jury will get its hands on Trump’s returns, the rest of us will get a look, too.

In a 7-2 decision, the Supreme Court rejected Trump's argument that his tax returns should be withheld from a New York grand jury.

But Twitter reacted to the decision in Trump v. Vance with misplaced enthusiasm. Apparently, lots of people seem to think that just because a grand jury will get its hands on Trump's returns, the rest of us will get a look, too.

Think again, Twitter. First of all, the grand jury probably won't see the tax returns any time soon, because the case has a ways to go in the lower courts before any financial records get delivered to anyone.

Second, grand jury proceedings are secret, and prosecutors and courts take that secrecy to heart. While leaks from a grand jury are possible, they're also rare. Trump's tax information — if and when it gets delivered to the grand jury — is likely to stay there.

Of course, another Supreme Court decision Thursday also touched on Trump's tax returns. But in that case, the president's quest for tax secrecy fared even better.

In Trump v. Mazars USA, the court evaluated several subpoenas issued by House committees seeking access to Trump's financial records. Tax returns weren't explicitly at issue in these subpoenas, but they might have been included in the materials delivered to the committees — if Trump had lost. Which he didn't.

The ruling wasn't clear cut: The justices simply vacated lower court decisions in which the president had lost and returned the cases to those courts for further consideration using a stricter standard for what constitutes a reasonable, enforceable congressional subpoena.

The Mazars decision was essentially a punt, and that sort of delay is good for Trump — because the records won't have to come out before Election Day, if they ever do — but he might still lose when the lower courts take a fresh look at the congressional subpoenas.

Congress may never get the returns in the first place, however. And the only way to fix that isn't by obsessively focusing on all the different ways courts can try to pry Trump's tax records out of his tight grasp but instead to remove the issue from the purview of the courts entirely. We need a law mandating that all presidents release their tax returns as part of routine public disclosure.

Presidents are taxpayers, just like everyone else. But unlike everyone else, presidents are also tax collectors. As head of the executive branch, the president is the ultimate supervisor of the IRS.

When the taxpayer-in-chief is also the tax collector-in-chief, we have an obvious problem. It's possible, for instance, that presidents might try to intervene in IRS audits of their personal returns. While that sort of interference is probably illegal, at least in its most blatant forms, what about more subtle forms of interference? What if IRS auditors, without explicit direction from the White House, decide to take it easy on their boss?

If that sounds implausible, then you aren't paying attention. It has happened before. In 1974, President Richard Nixon was caught playing fast and loose with the tax laws. And it wasn't the IRS that caught him; it was Congress. Even then, it was only after Nixon was forced by public pressure to make his tax returns public that he did so.

Nixon was the first president to make that sort of tax disclosure while in office. And beginning with Jimmy Carter, all presidents have released complete tax returns each year they have held office.

These returns have been the subject of intense scrutiny, both by the media and by an army of private-sector experts. This scrutiny has functioned as a sort of crowdsourced audit, a backstop for the official audits that the IRS conducts of all returns filed by presidents and vice presidents.

Those IRS audits may well be thorough and rigorous. But we can't know for sure, because the results are protected from public disclosure, just like the presidential returns themselves.

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Crowdsourced audits are no doubt unpleasant for presidential taxpayers. But America's chief executives managed to grin and bear it for more than four decades, so it can't be too awful.

When the taxpayer-in-chief is also the tax collector-in-chief, we have an obvious problem.

But crowdsourced audits came to an end when Trump won the 2016 election. Unlike his predecessors, he refused to release his returns as a candidate and continued to refuse once he was sworn in as president.

Without a public release, the tax behavior of any president — not just Trump — necessarily remains a mystery. The president may well be complying with the law, but we can't be sure. Congress might be able to find out, but as the decision in Mazars makes clear, congressional subpoena power is also not assured.

We need something more robust than the admirable but informal tradition of voluntary disclosure. We already expect presidents to make annual reports about their personal finances. We should simply require, via federal legislation, that presidents include tax returns as part of this annual disclosure.

Legislation to that effect has already passed the House. At some point, it would be great to see the Senate pass it, too, even if the prospects for a presidential signature are somewhat dim.

We need that sort of law, if only so we can avoid rehashing these tax disclosure arguments under the next taxpayer-in-chief.

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