Mihir Desai is a professor at Harvard Business School and Harvard Law School. Edward Kleinbard, a former chief of staff of the congressional Joint Committee on Taxation, is a professor at the University of Southern California Gould School of Law.
President Trump’s spokespeople have made it perfectly obvious that he will not release his federal income tax returns during his presidency. Appeals to the tradition of presidents publishing their returns will not change this president’s resolve. Nor is a more forceful approach likely to pry the returns into public view.
As others have explained, Congress’s Joint Committee on Taxation, composed of the senior tax writers from the two political parties in both the House and the Senate, has the authority to examine the president’s tax returns in closed session. The committee can then report its findings or release those returns to the Congress as a whole (and thereby the public). The tax code is clear on this.
Democrats on the committee might leap at the chance, but Republican leadership plainly is not ready to confront the president here through unilateral demands. And yet the day may come soon enough that those leaders find it in their strategic interest to embrace this authority, if it can be asserted adroitly.
In the meantime, the public interest demands more than accepting the current stalemate. The path forward requires sensitivity to the president’s presumptive reasons for his tax disclosure reticence — in other words, compromise.
What substantive concerns might Trump have regarding his tax returns?
First, his returns are extraordinarily complex and his wealth large; individual items might be misunderstood or misconstrued by those looking for scandal. Second, he would prefer not to unleash an army of amateur auditors eager to help the IRS. And third, his returns could reveal confidential commercial information and relationships, such as the terms of joint ventures or the prices at which properties were bought and sold.
These arguments don’t outweigh the public interest. Ensuring that the president has fulfilled his civic responsibility is critical to the integrity of the tax system.
Trump is no longer a private citizen; he is the “taxpayer in chief.” The U.S. income-tax system is a self-assessment regime — when you prepare and sign your return, you act in effect as the front-line assessor of tax against your own personal interests. This system depends entirely on the good faith and honesty of taxpayers, and it is incumbent on this, or any, president to lead by example, by assessing tax against himself fully and fairly, and letting the world see that he has done so.
The president wears another hat relevant to this issue: He is boss of the IRS. We think it obvious that any IRS auditor in his or her right mind would be terrified of proposing a large tax bill against this president. Yet this is an entirely plausible outcome of an audit of a billionaire real estate developer and lifestyle-brand entrepreneur. A way must be found whereby the audits of the president’s returns, which he himself has said are ongoing and essentially continuous, are not compromised by virtue of the extraordinary power he now wields over the agency charged with reviewing his affairs.
There is a possible compromise, rooted in precedent, that would address the president’s concerns and satisfy the public’s interest. In 1973, when President Richard Nixon faced his own tax controversy, he released his tax returns to the public, invited the Joint Committee on Taxation to review those returns, and committed to following its judgment on any deficiencies. A similar model can work here, even without the public disclosure of the current president’s returns.
Trump could invite the committee to review — confidentially — his tax returns, report its findings in detail to the IRS (so that the IRS could rely on them in reaching any audit determinations) and publish a public summary report, redacted of any proprietary business information. In doing so, the committee would rely on its existing highly professional nonpartisan staff of tax lawyers, economists and accountants to support its work.
The division of the committee’s findings into a large confidential report and a redacted public one would follow the model used for the Senate investigation into CIA interrogation techniques. The scope of the redacted public report would be negotiated in advance in a bipartisan process and might, for example, contain a summary explanation of any compliance issues raised by the review and a tally of taxes paid over particular periods.
The bipartisan and bicameral nature of the Joint Committee on Taxation, combined with its deep expertise, would legitimize this process. Indeed, the founding of the committee can be traced to a partisan dispute involving the tax matters of then-Treasury Secretary Andrew Mellon — the third-highest income-tax-payer during the 1920s, after John D. Rockefeller and Henry Ford. Trump might like the idea of engaging a mechanism created by the needs of Mellon.
By following this procedure, Trump would get a fair review, conducted by highly trained professionals, under the guidance of the (Republican-majority) members of the committee, without allowing direct public access to his returns. And American citizens would gain renewed confidence that the highest elected office in the land is occupied by an individual who has fulfilled his civic responsibilities.
As distasteful compromises go, it is a win-win proposition.