Citizen Trump’s Tax Returns

Richard Nixon

The custom of releasing presidential tax returns traces back to Nixon

I have written in the past that there are interesting things to learn from presidential tax returns and, by extension, those of presidential candidates.

Back in 2004, I wrote a pair of articles for my firm’s Sentinel newsletter, examining the interesting tidbits I could glean from the returns of the sitting president (and vice president) and a handful of his predecessors. As I explained then, someone with the patience and knowledge to sift through such information can learn some fascinating things, although those insights almost never show up in news reports. Very few political journalists, after all, have time – or tax expertise – to spare.

But although I have found presidential returns illuminating in the past, I do not feel entitled to see Donald Trump’s returns as a candidate for that office. Nor will I feel cheated if he refuses to release them.

This is because Trump has never held public office or controlled public resources. He, therefore, has never been in a position to either take advantage of official powers or enrich himself at the public’s expense. The closest he could have come would have required concurrent public officials to cooperate in real estate contexts, such as in cases involving eminent domain. Yet if such a thing had happened, it would have nothing to do with Trump’s tax returns.

Trump has argued that his tax rate is no one else’s business, and that voters have no particular right to see his returns, though at least for now he still plans to release them once an Internal Revenue Service audit wraps up. This has led some of his opponents to speculate – loudly – as to what Trump has to hide. Such an approach is nothing new; Mitt Romney came under fire in mid-2012 for not releasing his 2011 data, despite the fact his taxes weren’t complete at the time. (The former Massachusetts governor had released his return by late September, at which point it became a nonissue.)

As I noted in 2012, Romney should not have been obligated to share his tax information against his inclinations, but he had at least served in the public sphere long enough to somewhat justify the public’s desire to examine his return. Trump is a private citizen until and unless he is elected to public office. Should he be defeated in his campaign, he will go back to simply being “citizen Trump.” But there will be no way to restore the privacy of his financial affairs if he surrenders it.

So the question is whether there is some reason to force a private citizen to surrender his financial privacy as a precondition of seeking high office. What would such a requirement accomplish? If Trump has done something illegal or improper where his taxes are concerned, there are government authorities who should, in theory, be on top of it. The government should certainly do its part to make sure he is abiding by the law – but it should do the same for every American, regardless of whether he or she is running for president.

If, on the other hand, Trump has merely engaged in business dealings of varying success and controversy, there is an ample public record to let voters know about such projects. We will doubtless hear plenty during the general campaign about Trump University, Trump condominiums and many other components of the Trump universe.

But why is it my business – or yours – exactly how much money Trump made from these projects or how much he reported to the government? Sure, it’s interesting. But it is a gossipy kind of interest, the same sort that leads people who are not house shopping to wander into open houses just to poke around other people’s drawers.

Yes, Trump likes to boast about how much money he makes. It is likely that he has tried to refrain from such boasting on his income tax returns, at least to the extent he even knows the details of what goes into them. Most people with even moderately complex financial affairs cannot make much sense of their own tax returns, let alone documentation on Trump’s scale.

Releasing his papers would satisfy idle public curiosity, and it would provide endless grist for journalistic thumb-sucking and Democratic opposition research. But it would not tell the average voter anything more significant than what we have already learned from Trump’s insistence that his tax affairs are nobody else’s business.

If that offends you, don’t vote for him.

The custom of examining presidential tax returns began with Richard Nixon. But Nixon was a career public servant, who took only a brief hiatus as a lawyer in the private sector. He then claimed large and questionable deductions for donating his own public papers to government archives. Nixon was also aggressive in how he reported his real estate transactions, and played fast and loose with varying definitions of his permanent residence.

In fact, while Watergate is the more infamous component of Nixon’s downfall, his taxes played a large part in the court of public opinion at the time. As William D. Samson, an accounting professor at the University of Alabama at Tuscaloosa, put it in his 2005 analysis, “Nixon’s taxes were an issue that average citizens readily understood as compared to the constitutional issues raised by the Watergate investigation.” American taxpayers disliked the idea that their president had failed to pay his fair share.

In an attempt to restore public faith in the government in Nixon’s wake, Gerald Ford voluntarily released his tax return at the outset of his re-election campaign. Jimmy Carter followed suit, as has every president since.

All of Nixon’s successors, until Barack Obama, had spent a significant part of their prior careers in government service. And in Obama’s case, there just was not anything of great interest in his pre-presidential tax returns, which is why neither their release nor their content is widely remembered.

For now, Trump is just being Trump. It doesn’t bother me if he holds on to his tax privacy, at least as long as I hold on to mine.

About Larry M. Elkin 552 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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