Should Presidential Candidates Be Expected To Release Their Tax Returns?
As we’ve noted here at OTB in posts today and yesterday, Mitt Romney has spent the last several days stumbling over the questions that have arisen about his income tax returns, what’s in them, and when or whether he would release them. Last night, National Review came out and called upon Romney to release his returns sooner rather than later:
While we won’t know until we see the records, we can adduce little that could be contained therein that would cast doubt on Romney’s ability to execute the office of the presidency, or his ability to execute it better than Barack Obama. Romney took no salary as Massachusetts’s governor and none as head of the Olympic Games, and signed on to turn around Bain & Company for a dollar. He reportedly tithes, and, through a fund administered with his wife, has given millions to charity, including the proceeds from his book. If his effective income-tax rate is in fact 15 percent, it would exceed the effective rate paid by the average American. That most of his income is taxed at lower, capital-gains rates is not the result of some arcane loophole, but a core feature of the United States tax code. Not even President Obama is calling for capital gains taxed at regular income rates.
But if there is something troubling — or at least politically exploitable — in Romney’s returns, ’twere best it be known quickly. As Perry put it when he confronted Romney on the issue, since Republicans “cannot fire our nominee in September,” it is critical that Romney release his tax records now, that voters might “take a look and decide if we’ve got a flawed candidate.” We know that should Romney become the nominee, he will be criticized over the sources of his wealth and will have to effectively respond. Republican primary voters deserve to see whether he can do so before they vote.
If he is to be the nominee, a speedy release benefits Romney, as well. If he discloses tomorrow, he will have secured the time and space necessary to exhaust the present attacks on his wealth and craft a counter-narrative. If he waits until April, or beyond, he will have ensured that the attacks reach a fever pitch just in time for the Obama campaign to make them a centerpiece of its reelection class war.
As a political matter, the editors at NR are absolutely right. At this point, Romney has already committed to releasing his tax return but he seems to think he can wait until April to do it. Now, if it’s a question of his 2011 return not being ready yet then that’s one thing. However, the questions about his finances are going to continue whether the return is released or not so it seems wise to get something out there as soon as possible. If the 2011 return isn’t available yet, then release the 2010 return at least and deal with the issues now rather than at some point further down the road. Otherwise, the drip-drip-drip of speculation and rumor is just going to continue.
There has been some speculation that one of the reasons that Romney may be reluctant to release his returns is because they will reveal the extent of his tithing to the Mormon Church, including not insignificant amounts of Bain Capital stock over the years:
Underscoring the prominent, if little discussed role that Mitt Romney played as a Mormon leader, the private equity giant once run by the GOP presidential frontrunner carved his church a slice of several of its most lucrative business deals, securities records show, providing it with millions of dollars worth of stock in some of Bain Capital’s most well-known holdings.
Romney has always been a major donor to the Church of Jesus Christ of Latter-day Saints, which requires that members “tithe,” or give 10 percent of their income to the church. His family charity, called the Tyler Foundation, has given more than $4 million to the church in the past five years, including $1.8 million in 2008 and $600,000 in 2009. But because Romney, whose fortune has been estimated at $250 million, has never released his personal tax returns, the full extent of his giving has never been public.
Newly uncovered stock contributions made during Romney’s Bain days suggest there is another dimension to Romney’s support for the church — one that could involve millions more than has been previously disclosed.
As part of just one Bain transaction in 2008, involving its investment in Burger King Holdings, filings with the Securities and Exchange Commission reveal that an unnamed Bain partner donated 65,326 shares of Burger King stock to the Church of Jesus Christ of Latter-day Saints, holdings then worth nearly $1.9 million. And there were numerous others, giving the church a stake in other Bain properties, such as Domino’s Pizza, the electronics manufacturer DDi, the phosphates company Innophos Holdings, and Marquee Holdings, the parent to AMC Theaters.
All of this would be tax deductible, of course, so in addition of bringing Romney’s faith to the center once again, it would also play a role in the overall issue of his tax liability. There’s nothing wrong with it, of course, and donations to a mainline church should not be controversial in and of themselves, but it underscores the fact that releasing the returns will expose Romney not only on financial matters but also on the far touchier subject of religion.
There’s a broader question though, and that is whether any candidate should have to release their tax returns at all. As I’ve noted, there is no legal requirement that Presidential candidates release those records and, for a long time, no candidate ever did. According to some reports, the first candidate for President to do so voluntarily was George Romney in 1968, who released nearly more than a decades worth of tax returns as part of an effort to answer questions about the wealth he’d accumulated as the head of American Motors and in other business ventures. Despite that precedent, though, there are several prominent Presidential candidates over the past 44 years who have refused to release their tax returns. None of them have actually won their party’s nomination, but they did stand against the precedent.
In a column at The Fiscal Times, Ed Morrissey argues that candidates should not feel obligated to release their tax returns at all:
Income tax returns don’t tell much about financial assets and potential conflicts of interest that can’t be gleaned from their FEC-required disclosures, and so the lack of that data hardly matters.
Tax returns offer no further protection against public corruption, but do offer a voyeuristic peek into the private lives of candidates. What tax breaks do they seek? How much do they contribute to charity? What is their precise income level and their effective tax rate? No one really believes that they will find a crime that the IRS somehow managed to miss, like some sort of financial Sherlock Holmes, and almost everyone who reads them wouldn’t have the expertise to catch one anyway.
It is a surprising tradition in a country that values personal privacy, and especially in a political party that expresses so much resentment over the IRS prying into the very same areas of most other taxpayers. Many conservatives want to get the federal government out of the business of income tracking altogether by moving to a consumption tax instead. Culturally, many of us still consider a question even from friends or family to disclose our income as at least gauche and perhaps positively rude.
That is why the prurient interest in the tax returns of both Romney and Gingrich seems a little out of character for conservatives – like the attacks on Bain Capital for conducting normal and successful private-equity strategies. It sounds more like the kind of demand one would expect from Obama, and indeed the Obama campaign has already attacked Romney for not disclosing his tax returns. This led to an exchange in the White House briefing room between veteran correspondent Ed Henry and Press Secretary Jay Carney, when the Fox reporter asked the White House to disclose Obama’s college transcripts. (Carney referred Henry to the campaign for an answer to that question.)
Of course, there’s a huge difference between a candidates tax returns and his college tax returns.
Morrissey is right that, in an of themselves, tax returns actually tells us very little about a candidate’s financial status beyond what their total income was in a given year, what deductions they took advantage of, and how much they actually paid in taxes. To be honest, the financial disclosures that candidates are required by law to file with the Federal Election Commission are actually a more informative snapshot of their finances and wealth. That doesn’t mean the tax returns are totally irrelevant, though. The fact that a candidate might take advantage of a number of tax deductions at least tells us something about them and, as noted above, what deductions they take may end up being a political issue in and of itself. Moreover, there’s something to be said for the idea that a candidate for President shouldn’t be the sole judge of what is and is not relevant information in a political campaign.
Transcripts from an academic career that ended at least 20 years in the past, however, tell us absolutely nothing about what kind of person the candidate is today and may not even be that good an indication of how intelligent they are. The entire college transcripts issue seems to have started in 2000 when the college transcripts of George W. Bush and Al Gore somehow got released to the public. The same thing happened against in 2004 with John Kerry’s transcripts from Yale University. Under Federal law, of course, these records are completely private so unless a candidate agrees to release them voluntarily then they can only be obtained surreptitiously. The fact that Obama has not agreed to release his transcripts from Columbia University or Harvard Law School has been one of the many things the so-called “birther” movement has cited as evidence that he’s hiding something. Regardless of how they were obtained, though, there’s nothing about college transcripts that are relevant to a Presidential race. You simplycannot say the same thing about income tax returns.
Morrissey is also perplexed about why conservatives are pushing Romney on this issue:
[E]ven apart from the bad reporting, the tax returns are nothing more than a vehicle for class-warfare resentment. Everyone who runs for President has significant wealth; that’s true of the current President as well as all of his current challengers. This nine-day wonder of tax-return fever has liberals and even some conservatives hyperventilating over Romney’s 15% effective tax rate, when it’s pretty clear that Romney pays that on capital gains, not income. If he draws more than the high five figures for income — remember that he hasn’t been employed in the traditional sense since being governor of Massachusetts — I’d be shocked. Unless conservatives want to argue for a massive hike in the capital-gains tax rate, what exactly did they expect Romney’s effective tax rate to be?
I don’t think anyone is shocked that Romney is wealthy, or that he gets most of his income from investments, any more than people were shocked that John Kerry and George W. Bush were wealthy. Nonetheless, the fact of the matter is that this information is going to inevitably come out at some point if Romney is the nominee. Even if Romney declines to release his returns as a candidate during the primary season, something that both Mike Huckabee and Rudy Giuliani did in 2008, there’ s no way that he’d be able to avoid it once is the presumptive or actual nominee. For example, President Obama and Vice-President Biden will release their returns in April when they are filed, as every sitting President and Vice-President has done for decades. At that point, the pressure on Romney to release his would be relentless and unbearable. Isn’t it better both for the candidate and the party if that information gets out sooner rather than later?
So yes, release the returns. In the end, not doing so is only going to hurt the candidate more.