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Daily Tax Report: State

California Fight For Trump Tax Returns Goes to State High Court (1)

Nov. 5, 2019, 9:45 AMUpdated: Nov. 5, 2019, 10:44 PM

California Democrats have a chance to defend a new state law aimed at disclosing President Donald Trump’s tax returns before the California Supreme Court, after they lost similar challenges last month in federal court.

Attorneys for California Secretary of State Alex Padilla (D) will argue before the state Supreme Court’s seven judges Nov. 6 that the Legislature has the authority to require presidential and gubernatorial candidates to release five years of tax returns to be eligible to appear on the state primary ballot.

Democratic leaders are defending a challenge from the state Republican Party that the law, enacted in July, puts an “unprecedented shackle” on Padilla’s state constitutional duty to place on the ballot the names of candidates who are recognized across the state or nation, or who have become ballot-eligible through petition.

Padilla is denying “the crown jewel of his constitutional authority under the California Constitution, in favor of partisan legislative interference with that duty,” the Republicans argue in their briefs to the court.

Republicans are asking the court to block the law immediately because Trump has until Nov. 26 to provide his tax returns to be eligible for the March 3 primary ballot. The court won’t issue a ruling Nov. 6, and has 90 days to do so, a court spokesman said. But the justices have accelerated the case and could issue a ruling before Nov. 26.

Although California officials are appealing their loss in related cases in federal court, that might not matter: If the state’s high court strikes down the ballot-access requirement for violating the California Constitution, no other court could review its interpretation of the state law involved.

Trump broke with decades of tradition when he refused to release his tax returns during the 2016 campaign, prompting Democrats who control the California Legislature to pass the law. Trump is also embroiled in a legal fight with New York to stop state officials from handing over his returns to certain congressional committees if requested.

No Harm, No Foul

In briefs to the court, Attorney General Xavier Becerra (D) argued the state constitution’s requirements for the secretary of state to place recognized candidates on the ballot doesn’t dictate specific actions he or she must take. The constitution doesn’t require that all recognized candidates be placed on the ballot, but allows circumstances in which a recognized candidate is left off using neutral criteria such as the tax return law, the state argued.

The Republican Party hasn’t suffered actual or imminent harm—for example, with respect to the claim that the law will suppress voting for Republicans—that would warrant a ruling to block the law, the state argued.

“These potential harms all rest on the speculation that some potentially recognizable candidates will not comply” with the law, the state argued. “On the other hand, if most or all potentially recognizable candidates comply with the law, petitioners’ feared harm will not occur.”

The Republican Party argued it isn’t asking the court to order that a particular person’s name be placed on the ballot, but is seeking an order that Padilla ignore the Legislature’s attempt to impose a duty on him that violates the constitution. The Legislature’s authority is limited to deciding the time, place, and manner of primaries, while the secretary of state’s duty is to place presidential candidates on the ballot, the Republicans said in their briefs.

Voting, Association Rights

Harm to voting and association rights under the U.S. Constitution’s First Amendment, including the likelihood of voter suppression, are enough harm to justify an order blocking the law, the party argued.

“Indeed, the proverbial ‘elephant in the room’ is that the Legislature and governor have, through the Elections Code provisions enacted via S.B. 27, attempted to keep the sitting President of the United States off the primary ballot, thereby harming down-ballot Republican candidates by reducing the likelihood that Republican voters will go to the polls,” the party said in its briefs.

The oral arguments will be a second chance for state Democrats, who lost the first round in federal court Oct. 1, when U.S. District Judge Morrison C. England Jr. granted a request to place the law on hold while the court weighs whether it is constitutional. Trump and others have argued that the law adds a qualification for federal office not included in the U.S. Constitution.

The state has appealed the order to the U.S. Court of Appeals for the Ninth Circuit. It applies to five related cases, including one brought by Trump and his campaign.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com