Policy Summary
Since before he was elected, President Donald Trump’s tax returns have been a source of considerable controversy and speculation from voices on both sides of the aisle. Despite building his campaign on his reputation as a successful businessman and skilled “dealmaker,” Trump went to considerable lengths to hide the documents that would prove his statements true. No other president in U.S. history has refused to release his tax returns when asked raising the one question that Trump avoided answering but always seems to come back to haunt him-what is our president hiding?
As it turns out, all those with suspicions regarding Trump’s motives were right to be so. A few days ago, an expose published in the New York Times revealed that the decade of 1985-1994 saw Trump lose over $1 billion in business deals that failed for various reasons. The tax return documents obtained by the New York Times did not just reveal many of Trump’s claims about his wealth and success in business as being false. They gave rise to a concern that Trump may be guilty of violating federal tax laws by failing to report the significant losses he suffered.. Trump has claimed that all his “relevant” documents are currently in the hands of the I.R.S. for auditing but it remains unclear what “relevant” means to him.
No President has so much speculation regarding crooked motives regarding personal financial documents since Nixon’s dealings with wealthy campaign backers drew unwanted attention. In 1973 Nixon released four years worth of tax returns. The Congressional Committee that reviewed them determined that Nixon owed nearly $500,000 in back taxes. In the decades that followed, this scandal was overshadowed by the events of Watergate but when House Ways and Means Committee Chairman Richard Neal (D-Massachusetts) brought forth a subpoena in an attempt to drive the process of Trump releasing his tax returns forward, the events of Nixon’s presidency again caught the attention of lawmakers.
State legislatures across the nation are taking action to ensure that their president is held to the same standards of transparency as other citizens when it comes to personal financial documents. Last month, bills were introduced in 18 states that if passed would require every presidential candidate as well as their running mate to release their individual tax returns before they could qualify for the 2020 election ballot, typically for at least the previous five years. The list of states to introduce such bills includes New York, Illinois and Washington with the recent addition of California. A strong advocate for politicians releasing their tax returns, California Governor Gavin Newsome has released his own and promised to continue doing so on an annual basis during his time in office.
Analysis
Plenty of Trump’s Democratic challengers did not hesitate to release their tax returns despite the looming possibility that doing so could compromise certain cornerstones of their campaigns. When Sen. Bernie Sanders (D-Vermont) released his, it revealed the candidate who had built a movement preaching against America’s wealthiest class was himself a millionaire. The economic elite also now includes Sen. Elizabeth Warren (D-Massachusetts) who’s income combined with that of her husband, was over $846,000 in 2018. Both Sanders and Warren can chalk up much of their wealth to the sales of the books they have published since the 2016 election. Like Sanders, Warren has also built a campaign on policies that rely heavily on levying increased estate taxes on America’s wealthiest classes. Added to the list is California Democrat Kamala Harris whose tax returns revealed that her income in 2018 was roughly $1.89 million, though most of it was earned by her attorney husband. Though it may seem somewhat hypocritical for the Democrats running on platforms built on levying estate taxes and reducing economic inequality to be counted among the 1%, all such candidates have clearly recognized the bigger picture-that the complete transparency that they obtain by releasing their tax returns helps draw important contrast between themselves and the President they are trying to unseat.
There are several primary reasons why candidates such the 2020 Democrats should release their tax returns without pressure from Congress or the House of Representatives. The first is that doing so eliminates any conflicts of interests regarding who they are taking donations from. Plenty of Democrats, including Sanders and Harris have taken a stand against Super PACs funded by billionaires whose business interests could easily be linked to their generous donations. Suspected conflicts of interests regarding campaign donations are exactly what led to the secret that Nixon was trying to hide being discovered. Since Trump took office, the question of who truly helped win the election and who is influencing his administration’s policies has received almost more scrutiny than any other with voters suspecting everyone from Russian political figureheads to his billionaire backers.
By releasing their tax returns, the 2020 candidates who have done so have helped erase the notion that they are “working” for anyone besides the American people. Chris Kelly, director of Tax Policy at the notoriously right-learning Cato Institute went on record telling ABC News that none of the candidates who had released their tax returns as of April 17th 2019 were “ seemingly cheating or getting away with anything.”
The second significant benefit to releasing tax returns while on the campaign trail is that it clearly indicates how much each candidates has given to charity. For Democratic contenders to not be charitable would likely prove problematic for their campaign as many of their campaign primary policies center around levying taxes on the wealthy that are intended to fund social programs. Given what the public now knows about the personal finances of the candidates who are pushing for these policies, though, it would seem more important than ever for the 2020 Democrats to keep pace with giving generously. As of now, Warren has given the most of any candidates to charity, as she and her husband reportedly donated roughly 6% of their household income in 2018. Sanders, on the other hand, donated less than 4% of his household income although according to his campaign, the proceeds for his 2014 book The Speech were all donated to charity but the donation did not appear on his tax returns.
On the whole, it is clear that Trump’s consistent refusal to release his tax returns did nothing but present his opponents with an opportunity to distinguish themselves from him and prove to voters that they had no conflicts of interest. Those who have nothing to hide clearly have nothing to fear by disclosing their financial information as the candidates who were quick to disclose theirs have demonstrated. Some of Trump’s tax returns are supposedly still under audit and more details are likely to emerge as the election nears. That can’t be said for any of his Democratic opponents. The future is still uncertain but I can’t imagine any scenario in which the further scrutiny of Trump’s personal finances helps his chances of being reelected in 2020.
- Resistances Resources:
The Roosevelt Institute is a nonpartisan think-tank that produces research on matters involving economic policy and democracy. - The Tax History Project is a research organization established by Tax Analysts in 1995 to provide scholars, policymakers, students, the media, and citizens with information about the history of American taxation.
- The Center for Economic and Policy Research is an nonpartisan think-tank dedicated to promoting democratic debate on the most important economic and social issues including economic and tax policy.
Photo by Kelly Sikkema