Hillary Clinton released her latest federal income tax return on Friday
Ed McCaffery: Donald Trump is making a political mistake by not releasing his own tax returns
Editor’s Note: Edward J. McCaffery is Robert C. Packard trustee chair in law and a professor of law, economics and political science at the University of Southern California. He is the author of “Fair Not Flat: How to Make the Tax System Better and Simpler.” The opinions expressed in this commentary are solely those of the author.
Now that Hillary Clinton has released her 2015 tax returns, and her running mate, Tim Kaine, has released a decade of his returns, the Twilight Zone that is Donald Trump’s tax return release position has gotten even more shadowy.
There are two key lessons in this.
For a start, Trump continues to assert that he will not, cannot or should not release his returns while they are under audit. This has always been a bad argument, legally and factually. But logic never quiets Trump and team. Indeed, Trump’s in-house legal adviser, Michael Cohen, has recently repeated the fallacies, claiming it would be “malpractice” to advise Trump to release his returns while they are being audited.
Yet the truth is that Clinton’s just-released 2015 return is fully open to being audited. For the next three years, the IRS could challenge Clinton on anything that anyone – an eager press, an active “right-wing conspiracy” – might find in those returns.
Maybe it would be malpractice for a lawyer to advise a candidate to release tax returns, whether under audit or open to audit, because of the financial risk to the candidate. But it is political malpractice for Trump not to share relevant information about himself and about how he shares his wealth (if at all) with the public through paying his fair share of taxes. Warren Buffet, whose returns are also open to audit, has offered to publicly share his returns along with Trump’s, while others have pledged money if Trump releases the returns – taking away all of Trump’s trumped-up “audit defense.”
Second, the Clinton and Kaine tax return releases come in the same week that Trump gave what he billed as a major economic speech in Detroit. The speech centered on Trump’s call for tax reform. From what Trump himself said, we learned that his proposal for childcare tax relief would overwhelmingly benefit upper-income working mothers – like Ivanka Trump, who supposedly advises on such policies.
How would Trump’s tax plans affect him, personally? Hillary’s tax returns showed that she and Bill earned about $10.6 million in 2015, and paid $3.24 million in taxes for an effective tax rate of about 31%. Hillary’s tax reform plans would raise her own family’s taxes, by hundreds of thousands of dollars.
The impact of Trump’s tax plans on The Donald himself? We cannot tell, because we do not have his tax returns. What returns we do have, from the 1970s and 1980s (and a hint from the 1990s), show that Trump paid little to no taxes, taking advantage of tax breaks available to real estate dealers. Trump’s plan doesn’t appear to address any such breaks. Indeed, it lowers taxes especially on high earners – which may or may not include Trump.
Trump does tout how he is closing the “carried interest” loophole that Wall Street hedge fund managers use to reduce their taxes, but it is not clear that their taxes will in fact go up at all. It is also not clear if any of this is relevant to Trump, personally.
So Trump may be a big winner under his tax plan – perhaps because he pays little taxes now, and his plan would do nothing at all to change that happy (for him) fact. Regardless, the point – for all of us – is that we’ll never know. Apparently, it’s “none of our business” if Trump’s tax policy would benefit Trump himself.
Trump and his fellow Republicans like to lambaste Clinton for her alleged “pay-for-play” schemes. Is Donald Trump paying to become president so he can play trickle-down-tax-policy for himself and his family, to make the Trump brand rich again? If that sounds crazy, then Don’t-Disclose-Donald can prove it is indeed crazy by one simple step – releasing his returns.