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Daily Tax Report: State

Trump Triumphs as California Court Blocks Tax Return Law (2)

Nov. 21, 2019, 6:18 PMUpdated: Nov. 21, 2019, 8:54 PM

California can’t make President Donald Trump or other presidential candidates release their tax returns as a condition to appear on the statewide primary ballot, the state’s highest court said.

The California Supreme Court on Nov. 21 blocked enforcement of a new law requiring the most recent five years of returns from presidential candidates in time for Trump to avoid missing the Nov. 26 filing deadline for the March 3 California primary.

The Supreme Court’s ruling makes it clear the law won’t apply to the 2020 primary because it can’t be appealed, although California officials are appealing their loss in related cases in federal court that put the law on hold.

The unanimous ruling is a blow to Democratic lawmakers who enacted the law in July in response to Trump’s refusal to release his tax returns. The opinion reflects the skepticism California officials faced from justices at oral arguments in the case Nov. 6.

“The Legislature may well be correct that a presidential candidate’s income tax returns could provide California voters with important information,” the seven justices said. But ultimately the state Constitution says “it is the voters who must decide whether the refusal of a ‘recognized candidate throughout the national or throughout California for the office of the President of the United States’ to make such information available to the public will have consequences at the ballot box.”

The battle is one of several taking place across the country, stemming from Trump’s refusal to release his tax returns in 2016. The U.S. Supreme Court is likely to wade in to the fray eventually: Trump has appealed to the U.S. Supreme Court in two other cases as he tries to block the release of his records.

Plenary Powers

Justices rejected arguments from Supervising Deputy Attorney General Jay C. Russell that the Legislature’s plenary powers give it the authority to enact the law regulating access to primary ballots.

Instead, the court agreed with the California Republican Party, which argued the law tramples Secretary of State Alex Padilla’s (D) 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.

“The court went through every argument the state made and batted it down,” said Thomas W. Hiltachk, an attorney with Bell, McAndrews & Hiltachk LLP in Sacramento, who represents the California Republican Party in the case.

The exhaustive opinion may appear to be a victory for Trump, but it also protects voters from all parties by ensuring candidates have access to the ballot, he said.

Sen. Mike McGuire (D), who authored the bill, said the ruling undercuts transparency.

“The court’s decision to deny this critical information to the people of California is perplexing,” McGuire said. “This commonsense legislation applies equally to all candidates, from all political parties, including the governor of California.”

Justice Mariano-Florentino Cuellar said in a concurring opinion that lawmakers and voters can continue to seek tax returns from presidential candidates using moral suasion or legal requirements that don’t keep a candidate off the ballot.

Cuellar quoted Thomas Jefferson saying that the “time to guard against corruption and tyranny is before they shall have gotten their hold on us. It is better to keep the wolf out of the fold, than to trust to drawing his teeth and talons after he shall have entered.”

“The force of that warning remains undiluted by today’s decision,” Cuellar said.

The case is Patterson v. Padilla, Cal., No. S257302, 11/21/19.

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; Colleen Murphy at cmurphy@bloombergtax.com