President Donald 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 Neal, D-Mass., slated to become the chairman of the tax-writing House Ways and Means Committee, 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 if he has any conflicts of interest. The inquiry could potentially 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.
Neal said there was longstanding precedent of presidents and presidential candidates releasing their tax returns. He acknowledged, though, that the Treasury Department might not quickly provide the information, 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, as they’d want to abide by any legal parameters that protect privacy.
Some leading Democrats have suggested they will use a 1924 law that allows the chairman of the House Ways and Means Committee to obtain the tax returns of any American from the Treasury Secretary.
They have said they might do this because during the 2016 presidential campaign Trump became one of the only presidential candidates in recent history who refused to release his tax returns.
It’s unclear what powers Trump might use to block the release of these filings, as the White House is not supposed to be part of the decision-making process that was set forth in the 1924 law that gives lawmakers the ability to demand the release of any 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. Federal 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.”
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 where Trump can disclose a limited amount of records and avoid having Congress comb through all of his past tax returns.
In Tuesday night’s midterm elections, Democrats won a majority of the seats in the House of Representatives. They will control the chamber beginning in January when new members are sworn in.
The law Democrats would use to demand the tax returns was created during the Teapot Dome scandal in the Harding administration, when lawmakers were investigating conflicts of interest during the White House at that time.
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.
If Trump ordered Mnuchin not to release his tax returns, Democrats could file a lawsuit and the issue could ultimately end up before the Supreme Court.
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, in order 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 the House [of Representatives in the 2020 election] 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.