Scrutinizing Trump’s Taxes is in Congress’s Power, by U.S. Rep. Bill Pascrell, Jr.

by Guest Blogger — Friday, Nov. 16, 2018

I read with great interest Andy Grewal’s recent post on plans by House Democrats to compel the release to Congress of Donald Trump’s tax returns. As a Democratic Member of the House of Representatives and the leader of my caucus’s efforts to expose Trump’s financial records to sunlight, I felt it appropriate to respond to Grewal’s piece.

Our focus on Trump’s personal and business tax returns stems from Trump’s refusal to provide a scintilla of transparency on his family’s corporate empire. As the first man to become President not to release any of his tax returns in decades, his rejection of democratic norms is bad enough, made unbearable given the size, scope and opacity of Trump’s companies. Recent investigations detailing widespread tax fraud and other financial crimes by Trump and his family only add to our urgency to scrutinize Trump’s returns.

My calls for this scrutiny are straightforward and grounded in probity. If the President will not release his tax returns voluntarily, my colleagues and I would like the chairman of the House Ways and Means Committee to write a letter to the Secretary of the Treasury invoking 26 U.S.C. §6103(f) and demand he furnish to the committee Trump’s returns covering a substantial period. We have made this request in numerous forms and motions, and we have been rejected by united House Republicans each time.

A little history on this provision of the tax code is valuable. In 1910, as part of broader institutional reforms, Congress gave the President the authority to obtain and potentially disclose the tax information of any American. Congress did not grant itself that power. Consequently, the President was the only person in the country who could order transparency of a citizen’s tax records.

Congress realized that this was a danger to the Constitution’s separation of powers after the Teapot Dome Scandal. Following the death of President Harding, it was uncovered that members of his administration were selling off oil leases on public lands to drilling barons in exchange for lucrative bribes. Congress began investigating, but members discovered that they could only see the financial records of figures implicated in the scandal if President Coolidge granted their requests. Members recognized that the law as written was untenable and amended it to give themselves that authority too.

Although Congress’s power under Section 6103(f) should therefore be liberally construed to match the president’s unrestricted ability to access tax returns in 1924, there are safeguards. Once the Treasury Secretary furnishes the returns to the chairman, the relevant documents will be studied in closed executive session by members of the committee and agents appointed by the committee. Pursuant to the law, the committee is permitted to submit any of the information obtained to the full House. Such disclosure would be subject to a committee vote, another protective mechanism over this otherwise confidential information.

While every President since Nixon has released tax return information to the public, if given the opportunity, members of the Ways and Means Committee would nonetheless exercise the utmost caution before forcing release of Trump’s returns. We will weigh the public good against his personal interest in keeping them hidden. It is a powerful responsibility, and one none of us take lightly. Indeed, the authority has been used sparingly, and almost always with great care.

There have been exceptions, of course. For example, in 2014, Republican members of the Ways and Means Committee, over the strong objections of myself and my Democratic colleagues, voted to release the tax information of 51 taxpaying entities as part of their investigation into the IRS. This action remains the very type of “fishing expedition” outgoing chairman Kevin Brady would decry about our quest to impose sunlight on Trump.

For some reason, Grewal seems interested in providing a blueprint for Trump to target the tax returns of his political enemies. Grewal notes that “[s]ection 6103(g) authorizes the President to obtain anyone’s tax return from the IRS,” which is incorrect, then footnotes that the President does not, in fact, have that power under the statute. He then writes that section 6103(g) “contains no meaningful restrictions on the President’s authority.”

This is also factually incorrect. In the aftermath of Watergate, when Richard Nixon’s abuse of the IRS’s auditing power was brought to light, the Tax Reform Act of 1976 abolished the executive’s power to order the disclosure of individual tax returns that office had enjoyed since 1910. At the same time, Congress left in place in 6103(f) its own authority to compel the release of individual tax returns.

Indeed, in 1976 Congress also eliminated the power of our non-tax committees to make tax return information public in section 6103(f)(4)(B) – but specifically did not place the same limitation on tax committees. This demonstrates that our tax committee is not bound by the non-disclosure rule of 6103(a).

Under the current 6103(g), the President has no authority to disclose tax return information. He is limited by the general no-disclosure rule in 6103(a). Congress made any access by him subject to reporting to the Joint Committee on Taxation (JCT) to prevent inappropriate “snooping,” and then barred his ability to disclose altogether. The statute is pretty clear on this point.

For the President to invoke 6103(g) as Grewal describes, he must explain to the JCT the reason for obtaining any information and the JCT may disclose the President’s access if in the “national interest.” Because of the previous abuses and Congress’s attempt to end such abuse, the President’s right here should be interpreted narrowly.

But regardless, I view the speculative nature of the discussion of the President’s powers of vengeance to be needlessly distracting. Congress is the foremost guardian of the health of our government and the fitness of the executive. Under Section 6103, Congress has the clear power to scrutinize Donald Trump’s tax returns. And based on his history of likely tax fraud and a multitude of reports on conflicts of interests, it would be irresponsible not to use this authority.

Bill Pascrell, Jr. represents New Jersey’s Ninth District in Congress, which includes Paterson, Englewood, Fort Lee, and 32 other cities and towns. He is New Jersey’s only member of the tax-writing House Ways and Means Committee.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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2 thoughts on “Scrutinizing Trump’s Taxes is in Congress’s Power, by U.S. Rep. Bill Pascrell, Jr.

  1. Andy Grewal

    Rep. Pascrell,

    Thank you for contributing to the debate. Please note that my prior post related to the President’s ability to inspect federal tax returns, not the President’s ability to disclose them. As my post states, section 7213 would probably criminalize the President’s unlawful disclosures.

    Andy Grewal

    Reply
  2. Professor Eric Rasmusen

    I’m glad the Congressman replied. Still, I foresee the following scenario:
    1. Congress asks for the President’s tax return and gets it.
    2. The President asks for the tax returns of Congressmen, with proper notice to Congress, and gets them.
    3. The President notes that he has possession of the Congressmen’s tax returns and they are really interesting. He notes that if his return is made public, it would be only fair to make the returns of some or all Congressmen public (maybe just those who voted to make his returns public, for example).
    4. Congress makes the President’s returns public. (Possible outcome; the story might stop at step 3).
    5. The President repeats his public statement.
    6. The President, after his staff has looked over the Congressional tax returns, forwards notice of any suspicions to the IRS for possible audit. He renounces any claim to a whistleblower reward, which claim would, if I remember rightly, be invalid because federal employees aren’t eligible.
    This story might also include a roll call vote in Congress so that members would be on record as to whether they think elected officials should disclose their tax returns or not. The Democratic leadership might be able to squelch holding a vote in the House, though.

    Reply

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