Trump is being challenged by his competitors in the race for President to release his tax returns. Cruz speculates that Trump has Mafia ties. Surely that will come out in his tax returns? Right?
Hillary speculates about all of the hidden things there at the same time that she sort of ignores Bernie’s request to release copies of her speeches to Goldman Sachs where she was paid a couple of hundred thousand dollars.
Romney, who wisely hid his tax returns for as long as he possibly could, and whose returns showed he paid a smaller percentage of his income to the government than most people who flip hamburgers (if they pay the social security tax) is speaking out about Trump’s tax revelation delays.
Dubya, the second of the Bush dynasty might be best to answer that question. When his return was made public it showed that he had taken a capital gains of not just the portion of the Texas Rangers he actually owned, but also the sales commission he got for selling them, which was larger than his ownership portion. He put the income on the wrong schedule. Some people call that a mistake. Some, like IRS special agents, might call it income tax evasion since it removed that money from the highest bracket of unprotected income and moved it to the modest amount of capital gains treatment.
No one ever charged Mr. Bush with income tax evasion. In fact, he was never audited, and never paid the taxes he owed.
So perhaps that is what Trump is concerned with. People looking at the returns carefully and finding “mistakes” that could cost him lots of money, or lead to an indictment, or just embarrassment.
But the other candidates are sort of like pots calling the kettle black. Unlike Dubya and Mitt, who in an age of more disclosure (a decade ago) let us look at their whole tax return, most of the other candidates are only releasing the top two pages. So we can’t see who they gave charity too. We can’t see all of the things we might want to see,the specific deductions, the purchases, the depreciation. The Dubya-type “mistakes.”
Trump’s most recent response is that he is audited every year, and that since he is audited every year he has been told by his lawyers not to release his tax returns until his audits are over. If we assume he is telling the truth, then he is never going to release the returns because he is audited every year and will always be in perpetual audit.
Of course to do that, we have to assume he does what his lawyers tell him to do. It is hard to imagine that his lawyers told him to tell his audiences to punch people out. I am an ex-boxer and when I started practicing law forty years ago I had lots of boxers as clients. I never told a single client to punch anybody out. I did handle lots of cases where it happened, and while jurors were very gracious and understanding about the situations that led to the fights, my clients still would have been better off not having to go through the hassle of trials. And The Donald needs to fire his lawyers if they are telling him that its good legal policy to incite violence. So, even though I will presume Trump to be an honest tax payer, I have to go with the obvious and assume he doesn’t always do exactly what his lawyers tell him to do.
But would a lawyer or a CPA tell their clients not to put their tax returns on the internet? Of course. It would be malpractice to do otherwise. A large complex return is simply an invitation for voyeurs to look for problems.
A tax return published by any candidate will be examined by thousands of tax preparers, and by citizens looking for Interesting things, and by the candidate’s opponents looking for problems. No lawyer in his right mind would ever advise releasing it.
The standard, unsophisticated viewpoint is that “If nothing is wrong why not release the returns?” The sophisticated tax payer would respond either, “Fifth Amendment” or “none of your business.” But politics makes everyone less sophisticated. For the same reasons that none of the other candidates except apparently Bernie is releasing all of his tax return, with all of the schedules; no one wants the scrutiny. The logical next step of course would be to release the accountants’ work papers. Then the statements for all personal and business checking accounts and charge cards. Why not release everything if there is nothing to hide?
So let’s skip this part of the debate and go to the nosey stuff we might like to know about and take The Donald at his word. He isn’t releasing his returns yet because he is being audited.
Tax returns can be audited for three years after they are filed. They can be filed October 15th with extensions. So his 2015 return hasn’t been filed yet. It will be due this October. Assuming he isn’t guilty of not filing, go back four years (returns are filed the year following the income, nearly ten months later, so add three years + one for filing) we should be able to see his 2011returns and earlier. None of those has been released. Let’s give him some more room. Let’s say his 2011 returns are still under audit, that The Donald’s CPA’s and lawyers gave the IRS extensions on time so that the statutory deadlines don’t matter. Two more years would be extraordinary. So where are his 2010 returns?
Here’s what we might or might not see on Trumps’ returns.
We might find out he doesn’t make as much money as he claims. Since his entire campaign is based on the argument that he has “beautiful” companies that make lots of money, this is pretty relevant to us so he should either release the returns or he should stop running on his claims of income.
We might find out he doesn’t donate a lot of money to charity; maybe no money at all. Who knows? He claims that he did.
We might find out that as a real estate developer, he lawfully sells everything with 1031exchanges and pays no income tax at all. Since Trump brags about taking advantages of the laws and loopholes he will close down if elected, this wouldn’t seem to bother him. But maybe he didn’t do the 1031 exchange correctly. That could cost him a fortune. Maybe that’s not being audited (like Dubya) and exposure would only come from a magnifying glass examination like he would get if he made his returns public.
This sort-of Christian who doesn’t believe in turning the cheek and is courting evangelical voters might not (just like his evangelical competitor Cruz) tithe. Would that matter? He might not even be paying any Church dues to any organization. We already know he gives money across the aisles to both parties – he even brags about it – but what sort of charities does he give to? Did he give money to the Muslim Mosque that went up near the 9-11 location in New York? Probably not but one can only speculate. And of course, if it is important for inquiring minds to know, we should speculate.
Maybe, in spite of all his billions, he didn’t take all of the deductions he was entitled to. Maybe he hired incompetent tax preparers and that wouldn’t look good either. Here’s a guy running on his secret record for making lots of money and hiring lots of smart people. What if he didn’t make much money? What if he hired a stupid CPA who screwed up his tax returns?
Of course every rational business man wants the figure on line 22 to be as low as possible. The place where it says: “This is your total income.” Because the lower that number is, the lower your tax bill is going to be. There are lots of ways to get the figure lower. Lots of deductions and things. Normally, no matter how much we make or how little we make, we try to get that figure down. In Trump’s case though, he wants what he shows the public to be “beautiful…really big…yuuuuge!” It’s possible he had competent CPAs and competent tax lawyers who really did a good job and got that figure down to a very small amount.
In this fifth grade level series of debates, in which the size of a candidate’s private parts have become a political issue, Trump showing his tax returns might be just like pulling his pants down. When everything is showing, no matter how much Trump protests, concerned citizens will make up their own minds as to size and the validity of size.