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Some Democrats Are Wary About Starting a Fight for Trump’s Tax Returns

Laura Davison
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Some Democrats Are Wary About Starting a Fight for Trump’s Tax Returns

(Bloomberg) -- Top House Democrat Nancy Pelosi has said demanding President Donald Trump’s tax returns would be one of the first things the new Democratic majority will do, but some party strategists are urging caution.

Representative Richard Neal of Massachusetts, the soon-to-be head of the the tax-writing Ways and Means Committee, will have the authority to request any individual tax return from the Treasury secretary, including the president’s. Trump departed from roughly 40 years of tradition for presidential candidates by refusing to release his tax returns during the 2016 campaign.

Moderate Democratic operatives warn that any such request would set off foot dragging by the administration and a lengthy legal battle, with no guarantee returns would be produced before the 2020 election. Even if Neal gets the documents sooner, there’s also no guarantee they’ll contain anything damaging -- and that could provide fodder for Trump and Republicans to accuse Democrats of taking advantage of their power for political gain.

“The prospect of getting Trump’s tax returns is pretty compelling,” said Brad Bannon, a Democratic strategist. “But there is a lot of other stuff that is even more important and more interesting to voters.”

Forty-three percent of respondents to a PoliticoPro/Morning Consult poll conducted in October said they didn’t care that Trump hasn’t released his tax returns, even after a New York Times investigation detailed allegedly legally dubious tax dodges by Trump and his family. Forty-eight percent said they did care.

Trump signaled during a post-election press conference on Wednesday that he would be ready for a fight when Democrats assume control of the House in January, saying, as he’s repeatedly done, that his lawyers have advised him not to disclose his returns while he’s under audit.

Pelosi deferred to Neal during her own press conference, saying the committee chairman would make recommendations to the caucus about the tax returns. “You can be sure of one thing: When we go down any of these paths we’ll know what we’re doing and we’ll do it right,” she said.

‘Subpoenas Flying’

Democrats are planning an array of oversight activities to examine Trump and his administration with their newfound control of committee agendas. Yet some party leaders are cognizant of the need to play nice with Republicans.

“I think people can put things in silos and still work together,” said Representative Henry Cuellar, a Texan, who’s part of Democratic leadership. Cuellar, a moderate, has urged his party to temper talk of more extreme actions, such as impeachment, in order to work with Republicans on some pro-business issues.

Neal has other tax-related items on his agenda that would require bipartisan support and could be jeopardized by a battle over the president’s returns. There are technical corrections needed to fix the 2017 GOP tax overhaul, which will likely require negotiations between the parties. Neal has also signaled he wants to address pension funding issues.

Since Trump was elected House Democrats have tried more than a dozen times to force the tax return issue. Republicans have swatted down the effort, warning of tampering with privacy.

The law allows Neal to ask for Trump’s tax information from the Treasury Department, but he also has to provide justification for accessing the documents. Democrats have said Trump should release his returns to disclose any potential foreign business dealings or conflicts with the tax overhaul he signed last year. Treasury Secretary Steven Mnuchin could say that argument is inadequate. The fight could ultimately wind up at the Supreme Court.

Effectively Public

“Democrats should be careful,” Bannon said. “There are going to be subpoenas flying between the Hill and the White House like confetti.”

If Mnuchin were to comply with Neal’s request, the Ways and Means Committee chairman would then be able to share the returns with the panel’s members and staff. A vote would be required to release the returns to the rest of the House, which would mean they would effectively become public, according to George Yin, a tax law professor at the University of Virginia.

Tax experts caution that the president’s returns may not contain any damaging information, or even if they did, it could well be buried in the complexity of the Trump Organization’s web of limited liability companies.

‘Feet High’

The company is “far bigger than you would even understand,” Trump said in response to a reporter’s question Wednesday about releasing tax returns. The tax documents are “probably feet high,” he said.

If Neal doesn’t act fast enough, he’ll face pressure from his base, as well as from members of his own panel. Democratic Ways and Means members Bill Pascrell of New Jersey, and Lloyd Doggett, a Texan, have been behind the efforts to push the current chairman, Kevin Brady of Texas, to use his authority to see Trump’s returns.

“We need to act on this promptly,” Doggett told reporters on a call Wednesday. “It’s important to our oversight to get those returns. And to our national security.”

More than 50 liberal groups sent a letter to House and Senate leaders in October urging them to make Trump’s tax returns a No. 1 priority. Tim Hogan, a spokesman for Not One Penny, a group opposed to the Trump tax law that signed the letter, said if Mnuchin doesn’t release the returns in a timely manner, he would be in violation of the law.

‘It’s Time’

The group continued to apply pressure to House Democrats on Thursday with a full page New York Times advertisement that said, “Democrats, Congrats on winning the House! You said you’d get Trump’s tax returns. Now it’s time.”

Still, Phil Singer, a Democratic strategist who founded Marathon Strategies and was an official in Hillary Clinton’s 2008 presidential campaign, cautioned that the criticism of Trump for not releasing his returns “fell fairly flat” during the 2016 campaign. “It’s red meat for the Democratic base, but there’s not a major difference between where we are today and two years ago,” Singer said.

Neal, who’s served as the top Ways and Means Democrat since 2017, is known for being a measured legislator. He’s relatively pro-business and Republicans regard him as someone they can make a deal with. Leading the tax return release effort could impede his ability to work with the White House or Senate Republicans on any policy priorities, said Mattie Duppler, a senior fellow at the right-leaning National Taxpayers Union.

It could even hurt Neal with some of his party’s new House members whose victories on Tuesday helped put him in his position in the first place.

“A lot of the newly elected Democrats are from districts that used to be represented by Republicans,” Duppler said. “It’s not cut and dried that they have a mandate to be anti-Trump in everything they do in Washington.”

(Updates with Not One Penny advertisement in 20th paragraph.)

--With assistance from Lynnley Browning and Erik Wasson.

To contact the reporter on this story: Laura Davison in Washington at ldavison4@bloomberg.net

To contact the editors responsible for this story: Alexis Leondis at aleondis@bloomberg.net, Ros Krasny

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