Since 2015, President Trump has defied the post-Watergate norm of tax disclosures by presidents and presidential candidates. Now, reporting from the New York Times on nearly two decades of Trump’s tax return data has given the public a glimpse of what Trump was trying to hide. The data make plain the dangers of presidents subverting public duty for private gain, and highlight the importance of the broader conflict of interest norms that Trump has also defied. The president has demonstrated that norms do not suffice in these crucial areas of public accountability. As soon as Trump leaves the scene, Congress must act.
The tax disclosure norm grew out of the Watergate scandal, which revealed that Richard Nixon had manipulated an IRS charitable deduction and that his administration had pressured the IRS and Congress to preserve the deduction. To contain the controversy, Nixon disclosed several years of tax returns, agreed to a congressional investigation and paid hundreds of thousands in back taxes. Following Nixon’s resignation, both Gerald Ford and his vice-presidential choice, Nelson Rockefeller, released their tax returns to Congress as part of their confirmation process under the 25th Amendment. Starting with Jimmy Carter, it became a regular practice and expectation—a norm—for presidents to voluntarily release their tax returns to the public.
The norm helped allay concerns about presidential self-dealing before the IRS, an executive branch agency the president controls. Disclosure provided the public with information about presidents’ sources of income, deductions, charitable contributions, offshore accounts and foreign business dealings, which together reveal a lot about the priorities and commitments of the nation’s leader—and, more importantly, flag possible conflicts of interest between the president’s public duties and his private interests.
Tax disclosure was part of a broader set of post-Watergate norms designed to regulate such conflicts of interest. Presidents and vice presidents have long been exempted from the financial conflict-of-interest statutes and regulations, due both to misplaced constitutional concerns and to concerns that remedial “recusals” would be impractical given the president’s many duties. As a result, norms did most of the work in policing presidential conflicts of interest. Among other things, every president except Barack Obama—who maintained his uncomplicated financial interests in mutual funds and bank accounts—established a blind trust for financial holdings to prevent a risk of conflicts.
Trump defied all of these norms.
Ever since he announced his presidential campaign in 2015, he has refused to disclose his tax returns on the flimsy ground that he was being audited, thereby depriving the nation of knowing when his personal financial interests might influence his initiatives as chief executive. He also declined to create a blind trust and, instead, rolled his interests into a trust managed by his son Eric and the chief financial officer of the Trump organization. This ostensible separation of Trump from his businesses has been a sham in appearance and reality. Trump continued to monitor his enterprises in various ways, and to profit off of them because of his office.
The Times’s story makes plain why the nation needs to know about the financial interests of presidents and presidential candidates. Trump has paid no personal income taxes for 11 of the past 18 years. He deploys tax deductions aggressively. His properties, the Times writes, “have become bazaars for collecting money directly from lobbyists, foreign officials and others seeking face time, access or favor.” And perhaps most importantly, he and his businesses—at home and abroad—are massively in debt. Trump “is personally responsible for loans and other debts totaling $421 million, with most of it coming due within four years.” If he is reelected, “his lenders could be placed in the unprecedented position of weighing whether to foreclose on a sitting president.”
These are important facts for the American people to know and weigh before placing their fate in Trump’s hands for four more years. They are facts that voters should have had four years ago.
The nation should never again rely on norms to ensure that presidents disclose their finances fully or to guard against conflicts of interest between public duties and private gain. In “After Trump: Reconstructing the Presidency,” former Obama White House Counsel Bob Bauer and I lay out a detailed scheme for how to fix this problem. The three most important reforms are as follows:
First, Congress should require public disclosure of the tax returns of presidents, vice presidents and major parties’ presidential tickets, and the tax returns of any of the president’s or vice president’s family members who hold senior executive branch positions. This is simply a codification of the norms that prevailed before Trump, with an extension to family members.
Second, Congress should bar presidents from any active or supervisory role in the oversight of any business, including any formal or informal role. It should also require presidents to certify annually, subject to criminal penalties, that they have complied with this restriction.
Third, Congress should require presidents to account regularly and transparently for their income, holdings, and management of assets and investments. Presidents should be prohibited from establishing “blind trusts.” This is a change from prior norms. Blind trusts are hard to police, and Congress and the public should in any event have full visibility into the financial affairs and business associates of any firm in which presidents have a significant interest. To ensure such transparency, Congress should further require the businesses in which presidents have an interest to report publicly those interests, including the names of persons with interests in the firm or other entity, and the value of assets and liabilities.
These three relatively simple reforms, supplemented by some less ambitious ones, should be low-hanging fruit in the project of reconstructing the presidency once Trump is gone from the scene. The next president is unlikely to oppose such reforms, which would simply restore and improve presidential practices that prevailed before Trump. And Republicans—who tend to be skeptical of presidential power and discretion when a Republican does not occupy the White House—should have no objection to these good governance proposals, which present remarkably few downsides.