A New Approach to Presidential Tax Disclosure [Updated]

By: Sam Brunson

I’ve written a couple times about the various presidential candidates’ tax return disclosure and nondisclosure. Ultimately, I concluded that, unless Congress mandates disclosure, it’s not going to happen.

It turns out that I may have been wrong.

No, I don’t mean that the disclosure norm is going to reassert itself. I do mean, though, that requiring presidential candidates to disclose their tax returns may not require Congressional action after all. 

Earlier this week, New York State Senator Brad Hoylman has drafted the Tax Returns Uniformly Made Public (T.R.U.M.P.) Act, which he expects to introduce in the upcoming legislative session. If passed, it would require candidates for president and vice president to release their last five years of tax returns to the New York State Board of Elections, which would redact personal information, then make the returns public.

But what incentive would candidates have to comply with New York State law? That’s the clever thing about this proposal: candidates who failed to comply would not appear on New York ballots, and New York electors would be prohibited from voting for that candidate.

A couple quick thoughts on this approach:

First, in spite of its (tremendously clever) name, this law would provide almost no incentive for president-elect Trump to release his returns when he runs for reelection. Why not? Primarily because New York hasn’t voted for the Republican since Reagan in 1984. So losing New York’s electoral votes isn’t really a big deal for a Republican candidate.

Still, I think it’s a great idea. Tax return disclosure doesn’t fall along partisan lines: in this election, Bush and Clinton would have clearly met the T.R.U.M.P. Act’s requirements, while Trump and Sanders would have clearly failed to meet them. If you believe that presidential candidates should release their returns (which I do), you should believe it whether their names are followed by R or D.

Also, Sen. Hoylman doesn’t believe this should just be a New York thing: he’s promoting it as “model legislation for legislature across the country.” And if, in addition to New York, a red state (or, even better, a swing state) were to enact similar legislation, candidates from both parties would feel intense pressure to release their returns.

Second, the legal feasibility. I’m not an election law person (though if one wants to chime in, welcome!), but my lay-ish understanding is that states maintain wide latitude in determining how they determine whose name can appear on their ballots, as well as the rules for how to assign electors. Nothing about this approach seems so egregiously unfair that it would warrant a challenge (though, again, this isn’t my area of law). [Update: Andy Grewal tells me that Election Law Twitter is unanimous in its appraisal that this would be unconstitutional. And they’re probably right—this is way outside of my expertise. Still, that doesn’t affect the analysis of its permissibility under the tax law.]

On the tax side, the Internal Revenue Code protects taxpayers’ privacy. With very few exceptions, officers and employees of the federal government cannot disclose other people’s tax returns or return information.

This nondisclosure obligation also extends to state officers and employees. But it only extends to them if the returns were disclosed to them by the federal government for certain purposes. It does not prevent states from releasing taxpayers’ returns if those returns were provided by the taxpayer him- or herself.

Will it work? Who knows. It has to be passed first (by at least a couple states). But it is a clever way of addressing an issue that Congress may or may not have the legislative willpower to fix.