President Trump and newly empowered congressional Democrats appeared to be on a collision course over the release of the president’s tax returns, as a top Democrat signaled he would demand the information under federal law and Trump insisted he would attempt to block any release.
Rep. Richard E. Neal (D-Mass.), expected to become the chairman of the tax-writing House Ways and Means Committee once his party retakes power in January, plans to insist Trump voluntarily release his tax returns, he said in an interview. If Trump doesn’t, then Neal will file a legal request with the treasury secretary that would require the returns be disclosed to a small group of people on Capitol Hill. He predicted the matter would end up in federal court.
At a news conference Wednesday, Trump said his tax returns were already under audit and therefore he would not release them. He said he might consider releasing them at a later date, something he has said since at least 2016.
“Nobody turns over a [tax] return when it’s under audit,” Trump said during a news conference when asked about the returns.
Later, though, he acknowledged the audit would not prevent the release of his tax returns.
“I didn’t say it prevented me, I said lawyers will tell you not to do it,” he said. Then he asked the reporter to change the subject.
Democrats have said they want to scrutinize Trump’s tax returns to see whether he has any conflicts of interest. The inquiry could tie to a broader investigation into any connection between Trump’s presidential campaign and Russian involvement in the 2016 election — a charge the president has repeatedly and vehemently denied.
There is a long-standing tradition of presidents and presidential candidates releasing their tax returns, but Neal acknowledged that the Treasury Department might not provide the information quickly, setting up a legal battle.
“I assume that there would be some sort of a court case, but we’d have to wait and see,” he said.
He said he would defer to staff on the Joint Committee on Taxation in Congress to determine what information might be requested and who would have access to it. He said the information could be closely held within Congress, and lawmakers would abide by any legal parameters that protect privacy.
It’s unclear what powers Trump might use to block the release of these filings because the White House is not supposed to be part of the decision-making process that was set forth in a 1924 law that gives certain lawmakers the ability to demand the release of any American’s tax return.
If Democrats demand the returns and Trump refuses to release them, it could set off a series of legal challenges, with federal judges being asked to adjudicate the limits of the president’s power.
If Neal formally requests Trump’s tax returns, the request would go to Treasury Secretary Steven Mnuchin. The law stipulates that Mnuchin “shall” turn over the tax returns and doesn’t appear to give him much flexibility. It also doesn’t appear to give the White House the power to intervene.
Treasury Department officials have been noncommittal about what would happen if Neal submits the request, and an agency spokesperson on Wednesday said “Secretary Mnuchin will review any request with Treasury’s General Counsel for legality.”
Trump’s main reason for saying he wouldn’t allow the tax returns to be released is because “people don’t understand tax returns.”
Neal dismissed that justification.
“How do you do them if nobody understands them?” Neal said, adding, “tax staff over at Joint Tax [Committee], they’re pretty capable people.”
“I think it’s pretty obvious these are going to be complex documents,” Neal said.
Trump also said that if Democrats began using their new majority to investigate him, he would direct Senate Republicans to launch investigations targeting Democrats. The investigations, he said, would destroy any prospect of bipartisan cooperation next year.
“All you are going to do is end up in back and forth and back and forth, and two years is going to end up and we won’t have done a thing,” Trump said.
In first calling on Trump to disclose the records voluntarily, Neal could be setting up a scenario in which Trump can disclose a limited amount of records and avoid having Congress comb through all of his tax returns.
The law Democrats would use to demand the tax returns was created during the Teapot Dome scandal in Warren G. Harding’s administration, when lawmakers were investigating bribery allegations in his Cabinet.
The law says the treasury secretary “shall furnish” any “return or return information” requested by the chairman of the House Ways and Means Committee or the Senate Finance Committee.
George Yin, the former executive director of the Joint Committee on Taxation, said in an interview Wednesday that he doesn’t believe there is any legal basis for the White House to assert executive privilege in attempting to block the release of tax returns.
“I can’t think of any grounds for executive privilege,” said Yin, who is now a professor of law and taxation at the University of Virginia. “All of this seems to me to have nothing to do with his official duties as president.”
But he said there would be an onus on Democrats to explain precisely why they are seeking the information, to prove there is a legitimate legislative purpose for any inquiry.
Janice Mays, who spent more than 40 years on the House Ways and Means Committee, including as chief counsel, said if Trump sought to block the release of his tax returns, Democrats could file a lawsuit, likely in U.S. District Court.
Mays is now a managing director of tax policy services at PwC.
What the White House would want, Mays said, “is to buy two years of time” while the issue was bogged down by lawyers. And then the White House would hope Republicans take back the House in 2020 and nobody is demanding [the tax returns] at that point.”
In the interview, Neal said Democrats did not win control of the House by promising to obtain Trump’s tax returns, and that it would not be the singular focus of his first year as chairman. He said Americans were more interested in issues like health care and Social Security, things he planned to focus on next year.