Should Donald J. Trump Release His Tax Returns?

In this most interesting presidential election primary season, many different issues have dominated the news.  Perhaps no candidate has dominated the airwaves more than Donald J. Trump, the leading candidate in the Republican primaries.   Unsurprisingly, Mr. Trump has made a number of controversial statements, antagonizing a variety of groups and countries alike.  It is no surprise then that Trump is again in the center of the latest controversy – the release of his tax returns.

It is a popular rite of passage for presidential candidates to release their tax returns, as part of the campaign for the nation’s highest office.  Candidates have abided by this practice to varying degrees, and with varying degrees of reluctance.  Especially as a leading candidate for the office, Donald Trump is having his feet put to the fire over his refusal to release his tax returns.  Leading the charge to demand for the release is no less than Mitt Romney, the 2012 Republican flagbearer.

Coming from Mitt Romney, this is especially rich.  Most Americans remember that, just four years ago, Mitt Romney was particularly resistant to releasing his tax returns.  Even when he did, late in the campaign, he only released portions of his returns.  Of course, the truculent Mr. Trump promptly pointed out that Mitt Romney was in no position to cast stones as he too released his returns late into his presidential campaign.

Donald Trump has offered up several different excuses for not releasing his tax returns.  First, a Democratic presidential candidate, Secretary Hillary Clinton, had to release hers.   Then he explained that his returns were being prepared.  Now, most recently, he’s offered that the returns are being audited and he cannot release them during the audit.  Is Donald Trump right that he cannot release his return because they are being audited?  And why can’t he release the ones that are not currently under audit?

As a preliminary matter, Mr. Trump has also insisted that, contrary to his rivals’ assertion, a tax return generally does not reveal the taxpayer’s net worth.  On this question, Mr. Trump is correct.  A tax return only reports the income for the particular year.  As a report of the taxpayer’s income in a particular year, a tax return, in of itself, may not tell much about the taxpayer’s net worth.  Notwithstanding, little nuggets like charitable contributions, etc. can be gleaned from a tax return.

The bigger question though, concerns Mr. Trump’s recent declarations that he cannot release his tax returns while in the midst of an audit.  This is a non-sequitur.  An ongoing audit nominally has nothing to do with whether a taxpayer can disclose his return to others.   A taxpayer may elect at any time to release a copy of his return.  There is no denying that  Mr. Trump has already prepared and filed his returns with the IRS.  They are his returns and he can simply decide to release a copy of the filed returns to the public.

Furthermore, like every other filed returns, Mr. Trump’s returns include the jurat.  His declarations on his returns, that he had examined the returns and that they are true, complete and correct, are made under penalty of perjury.  Surely, any returns he filed with the government, under penalty of perjury, should be sufficiently reliable for public disclosure.  If there are any adjustments subsequently required as a result of the audit, Mr. Trump  can choose to disclose such changes to the public.   And of course, the IRS cannot stop him from disclosing his own returns.

However, the real question is, whether Mr. Trump should release the returns.  If I was his tax attorney, my answer would be, using Mr. Trump’s characteristic colorful language, “Heck no!”    I certainly would not advise Mr. Trump to make public his returns while undergoing an audit, in the middle of a heated political campaign.  First, an audit is inevitably laden with its own share of potential perils.  A public disclosure of the returns will surely make the examination more politically charged, with a resultant effect that is not likely to be to Mr. Trump’s benefit.  It is quite possible, and perhaps likely, that once his return has been made public, Mr. Trump’s opponents, members of the press and the general public, will give it more scrutiny.  Folks may take issue with particular items on the returns  that were not hitherto a focus of the audit.  The examiner, likely feeling the political heat, may then have to give increased scrutiny to the suddenly larger basket of issues on the returns. This can only make the audit experience more contentious for Mr. Trump.  And, if word leaked out, during a presidential campaign, that the IRS made adverse changes to his returns during an audit, it will likely cost Mr. Trump more than just money.

But, of course, the more critical question is the political question.  What potentially is the political cost to Donald Trump if he were to release his returns?  And how does that stack up against the fallout from not releasing the returns?.

Mr. Trump has won three of the four Republican primaries held so far, with nearly twice as many delegates as the remaining candidates, combined.  He has the wind at his back going into the important Super Tuesday primaries on March 1, where 595 delegates of 1,237 delegates needed to clinch the nomination are at stake.  He is currently leading in the polls in a majority of the states holding their Republican primaries on Super Tuesday.  If Mr. Trump should release his tax returns into the campaign discourse at this point, it will immediately become a piñata for his political opponents who will reliably find many faults with the most innocuous of details in the returns.

Furthermore, Mr. Trump has already declared that he does his best to pay the smallest tax possible.  His tax returns that accomplish that goal therefore is unlikely to meet with glowing reviews from his opponents.

So, in the context of prudent tax positioning (and the political considerations), my guess is that Mr. Trump is unlikely to release his returns at this point in the contest.

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