In recent, separate Insights, GW Law Associate Dean Alan Morrison and former IRS Commissioner Lawrence Gibbs each suggested that if Congress succeeds in obtaining and disclosing the president’s tax returns, it might mean the end of tax privacy, to the detriment of all of us. Dean Morrison wrote: “[S]ome of the efforts to enable Congress, and perhaps everyone else, to see the tax returns of private citizen Donald J. Trump, may threaten [the tax privacy] principle, not just for him, but for everyone else.” Mr. Gibbs was more definitive: “[I]f politicians are able to obtain and make public the president’s tax returns and tax information, they are likely to do the same thing to anyone else they choose to target in the future, including but likely not limited to political donors or other supporters of any public figure in any political party.” This Insight argues that tax privacy concerns do not justify Congress curtailing its effort to get the president’s returns.
Current law (tax code Section 6103(f)(1)) authorizes each congressional tax committee to obtain upon request anyone’s tax return and related information, but the committee must hold the information in confidence. Separately, the law (Section 6103(f)(4)(A), 2d sent.) authorizes each committee to “submit” any tax return information obtained to the full House or Senate, potentially disclosing the information to the public. Aside from this right, the law does not permit any disclosure of the information by a committee other than to its agents (such as committee staff). In recent research completed prior to the present controversy, I examined the almost 100-year-old statute in detail and concluded that although the present statute does not include any restrictions, a tax committee must have a legitimate legislative purpose to submit confidential tax information to the House or Senate.
Let us suppose that a tax committee successfully obtains the president’s tax returns and, having a legitimate legislative purpose, submits the returns to the House or Senate for disclosure to the public. Would that action open the floodgates for additional, similar steps taken by a tax committee against other taxpayers, thereby destroying the concept of tax privacy? It is difficult to think of any taxpayer whose returns are as deserving of congressional scrutiny and possible disclosure as the president’s, but Morrison and Gibbs are presumably not just worried about legal disclosures in the future. Rather, they likely also fear improper ones serving no legitimate purpose.
Since they condition their warning on committee action against the president, their concern must be possible tit-for-tat behavior: If a tax committee successfully acts against the president—even though for a legitimate purpose and with legal authority—it will elicit a similar and possibly illegal response that is harmful. Whether a committee should therefore refrain from taking action and succumb to what in effect would be a form of blackmail depends upon both the importance of the committee action and the likelihood of the harmful response.
Historical experience provides a little insight on the latter question. In 2014 and 2015, in connection with their investigations of the IRS in the Lois Lerner affair, both the House and Senate tax committees used their authority to disclose to the public tax return information of various exempt organizations. When the proposed action, which was very contentious along partisan lines, was briefly debated by the House tax committee, some members raised the tit-for-tat worry as a reason not to act. Yet, thus far, nothing like that seems to have occurred. Though the Trump controversy has arisen, there is no indication that it is retaliation for the 2014-2015 actions.
In 1974, the tax committees used the same authority to obtain and disclose tax return information of former President Nixon. Despite the high-profile nature of that episode analogous to the current one, it was not followed by any tit-for-tat response.
Finally, when the tax committee authority was created in 1924, one of its likely targets was Treasury Secretary Andrew Mellon, who maintained numerous business interests while serving in government and, like the situation today, had drawn many cries from members of Congress for examination and exposure of his returns and finances. We don’t know if Congress ever got his returns, but there is no indication of a public dissemination. More generally, House Ways and Means Committee Chairman Richard Neal recently released a memo detailing multiple instances over the last three decades in which his committee obtained confidential tax information, almost all without any subsequent public disclosure.
These experiences—though limited—suggest the existence of constraints on congressional misbehavior in this area. Many members of Congress respect the general principle of tax privacy. Moreover, the possible criminal penalties for an improper disclosure should serve as a deterrent. When I worked in Congress, I saw first-hand the seriousness with which legislators treated possible violations of tax privacy.
The other factor—the public policy importance of a committee permitting disclosure of the president’s tax information to the public—cannot be assessed without first obtaining and examining the information. But the tax committees should not be timid about exercising their authority if warranted. Following the Watergate abuses, Congress strengthened taxpayer privacy protections but, with the Nixon episode still fresh in its mind, also preserved an outlet for public disclosure of tax information in essential cases. Since 1976, outside of limited permissible releases in litigation, the tax committee authority is the only means for such a disclosure. The tax committees therefore should act responsibly but not shy away from using their authority if the public’s interest demands it.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
George K. Yin is the Edwin S. Cohen Distinguished Professor of Law and Taxation Emeritus at the University of Virginia School of Law and served as Chief of Staff of the U.S. Joint Committee on Taxation from 2003 to 2005.
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