The Trump administration’s release of a tax plan — or, at least, a one page summary of its goals for tax policy — has drawn renewed attention to the president’s refusal to release his own tax returns. How much would the president personally benefit from his proposal to abolish the Alternative Minimum Tax? How much does he stand to gain from a reduced 15 percent rate on certain business income?
House Democrats have proposed a number of measures that would make the president’s tax returns public, but the Republican majority has blocked these efforts (despite defections by two of their members). With the president unlikely to release his returns and Congress unlikely to force him to, state lawmakers are looking for creative ways to compel disclosure of the president’s tax filings.
One such strategy, which state lawmakers in New York are pursuing, would lead to the immediate release of President Donald Trump’s state tax returns. A bill pending in Albany leverages the Empire State’s unique position as the sitting president’s lifelong home. It would require the state’s tax authority to publish any New York state returns filed by the president, the vice president, and all statewide elected officials. That bill would apply to returns filed in the past five years as well as all New York state returns filed by those officeholders in future years.
New York’s “immediate release” bill is not the only effort at the state level to force the disclosure of the president’s tax information. Another approach is to require presidential candidates to release their federal returns if they want their names on a given state’s 2020 ballot. Lawmakers in at least 30 states have introduced ballot access bills along these lines.
One disadvantage to the ballot access approach is it would not produce any information until the next presidential election. Another potential flaw is that Trump might choose not to go along. If these bills become law only in deep blue states, Trump might decide not to place his name on those states’ ballots, given that he expects to lose there anyway. New York’s immediate release strategy, by contrast, would take effect without a three-year time-lag, and there would be no way for President Trump to escape its operation. And while Trump’s New York state returns do not contain all of the information we would find in his federal returns, they come close.
Why it matters whether Trump’s tax returns are made public
Breaking with longstanding tradition, President Trump has so far successfully stonewalled all requests to get him to reveal his tax returns. First, he claimed that he’d been advised not to release his returns while he was under audit. But an IRS audit didn’t stop President Nixon from releasing his returns.
Now, President Trump says that voters don’t care about his taxes, but that’s demonstrably false as well. Surveys show that a majority of voters believe the president should release his returns — indeed, one recent poll found that 64 percent of self-identified Republicans think Trump should make his tax filings public.
Voters have good reasons for demanding disclosure of the president’s tax filings. In a tax system that relies on voluntary compliance, disclosure of the president’s tax returns shows citizens that their elected leader is paying taxes too — that taxes aren’t only for the “little people,” as Trump’s fellow New York real estate tycoon Leona Helmsley notoriously said. Disclosure also demonstrates to taxpayers that the president isn’t receiving favorable treatment from the IRS even though the agency is part of the executive branch.
A further function of presidential tax transparency is to allow voters to see how much the president would benefit from his own tax proposals, and so to assess whether the president is serving the public interest or his own self-interest. And while the president’s tax returns might not reveal all his business dealings, they could shed light on financial entanglements that potentially affect his decision-making in office.
A few pages of Trump’s tax filings — his 1995 state tax returns and the first two pages of his 2005 federal returns — have leaked already. These leaks reveal that Trump has used questionable claims of loss deductions to offset income and reduce his tax bill. But these drips and drabs from the past are no substitute for comprehensive and current tax filings.
Why the states can, and should, take the lead on this
For nearly a half century, presidents have abided by a norm of tax transparency without needing a law to force them. In theory, Congress could obtain and release the president’s returns if the president won’t release them himself. But if the Republican-controlled Congress refuses to act, our system of federalism allows states to intervene. As James Madison wrote in Federalist No. 51, the whole point of having distinct federal and state governments is to achieve a “double security”: If the federal government won’t stand up for the rights and interests of the people, the states can and should.
New York has an additional reason to release the president’s state returns: New Yorkers will spend as much as $60 million a year protecting President Trump’s wife and son while he is in the White House. New Yorkers deserve to know whether the president is paying a portion of these costs through New York state and city taxes.
Where the various bills stand now
So far, no state has enacted a law that makes ballot access in 2020 conditional on a candidate releasing his or her tax returns. Lawmakers in New Jersey passed a bill that would have done so, but Gov. Chris Christie vetoed it May 1.
Prospects for enactment are brighter in places like California and Hawaii — states with Democratic governors and overwhelming Democratic majorities in the state legislature. But these are also states where Hillary Clinton won by a landslide last November, and where President Trump stands little chance of prevailing in 2020. That’s why President Trump might decide not to place his name on those states’ ballots next time rather than releasing his returns.
Of course, if Trump cared about winning the popular vote, he would want to compete in all 50 states. But despite his hunger for public approval, he has already demonstrated quite clearly that he can lose the popular vote by a substantial margin and still win the presidency.
What are the chances of New York’s quite different strategy succeeding? Democrats occupy the governor’s mansion, 106 out of 150 seats in the State Assembly, and a slim majority of 32 spots in the 63-member State Senate. But in an “only in New York” twist, nine Democratic state senators have broken ranks with their own party and reached a power-sharing agreement with the Republicans. As a result, the Senate majority leader is a member of the Republican minority, and Republicans fill many key committee chairs as well.
The push to publish the president’s state tax returns received a boost late last month when the Independent Democratic Conference, which includes eight of the crossover Democrats, came out in favor of the proposal. The bill is now before a nine-member committee made up of five Republicans and four Democrats. Its fate could depend on a first-term Republican state senator, Elaine Phillips, who represents a heavily Democratic district in Nassau County, Long Island. If she joins her Democratic colleagues to support the measure, then the chances for passage increase significantly.
Note that New York almost certainly isn’t the only state where President Trump files tax returns. He also owns apartment buildings, golf courses, and hotels in a number of other states — including California, Connecticut, Hawaii, and Illinois — and so probably files nonresident returns there as well. Those won’t be as comprehensive as his New York resident returns, but they will show what he reports as income from in-state and out-of-state sources. These states, too, could demand release of Trump’s state tax forms, though there is little action on this front so far.
Will these laws hold up in court?
If a state passes a law requiring candidates to release their returns in order to have their names on the 2020 ballot, President Trump would almost certainly challenge that law in court. His strongest argument would be based on a 1983 Supreme Court case, Anderson v. Celebrezze, which limited the ability of states to take actions that affect national elections. Specifically, the court struck down an early filing deadline in Ohio that put third-party candidates at a disadvantage.
But notably, the court in Anderson did not say that all ballot access requirements were unconstitutional. Rather, it recognized that a state’s “important regulatory interests are generally sufficient to justify reasonable, nondiscriminatory restrictions.” A tax-disclosure requirement that applies to all presidential candidates from 2020 onward would likely meet that test.
President Trump also would likely challenge New York’s immediate release plan, if it passes. President Trump’s lawyers might argue, for instance, that the publication of his state tax returns infringes on his right to privacy, and so violates the 14th Amendment.
But at the time the Fourteenth Amendment was ratified in 1868, there was a broad understanding that tax information is a matter of public record. (Indeed, from 1862 to 1870, the names and liabilities of individual taxpayers were posted on courthouse doors.) More recent case law from the US Court of Appeals for the Second Circuit, which has jurisdiction over New York, holds that the constitutional right to privacy does not prevent a state or local government from requiring public officials to make detailed disclosures of their personal finances.
New York state and New York City already require such disclosures from many public employees. President Trump might further contend that publishing his tax returns from the past five years violates the Constitution’s limits on retroactive laws. He might say it is unfair to reveal returns from five years ago that he thought would be kept private at the time he filed them.
But the Constitution only prohibits states from enacting retroactive criminal laws. On civil matters, the test articulated by Justice Anthony Kennedy is “whether in enacting the retroactive law the legislature acted in an arbitrary and irrational way.” It’s entirely rational for New York to want its citizens to know whether their elected leaders have been paying taxes in recent years — and whether those leaders have financial conflicts of interest that might affect their performance in office.
What will we learn from these returns?
President Trump’s federal and state tax returns will reveal important information about his personal finances and his taxpaying past. We will learn, for instance, the income that he receives from all sources and the deductions he claims for charitable contributions and various other expenses. We will also learn whether he has been contributing to the cost of government over the years, or whether he has been leaving others to pay the bill.
What’s harder to say is whether Trump’s returns will reveal business ties to foreign governments. He certainly won’t include a line on either set of returns that says “$X received from Vladimir Putin for services rendered.” But if he holds financial accounts in foreign countries, he must disclose those to federal and state tax authorities alike. While we won’t know the full extent of the information in Trump’s tax returns until we see them, we can be confident that Trump’s tax returns will give us a more comprehensive view of his business dealings — though still not a complete picture.
But that’s a lot more than we know now.
Daniel Hemel is an assistant professor at the University of Chicago Law School. His essay, “Can New York Publish President Trump’s State Tax Returns,” is forthcoming in the Yale Law Journal Forum.
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