Democrats Take Trump Tax Return Fight To Court

Congressional Democrats are asking a federal judge to enforce their subpoena for Trump's taxes.

Congressional Democrats are suing the Trump administration over its refusal to hand over copies of the president’s personal tax returns.

The administration’s refusal to provide the documents represents “an extraordinary attack on the authority of Congress to obtain information needed to conduct oversight of Treasury, the IRS, and the tax laws on behalf of the American people,” the House Committee on Ways and Means told a federal court on Tuesday.

Rep. Richard Neal (D-Mass.), the committee’s chairman, asked for six years of President Donald Trump’s personal and business returns, only to be rebuffed by Treasury Secretary Steven Mnuchin.

Mnuchin argued that the request represents an unprecedented abuse of power, since Democrats want the private tax information of a political enemy. But Republicans themselves have used tax disclosure against their political enemies in recent years.

Federal law says the chairs of tax committees like Ways and Means are allowed to ask for anyone’s private tax information and that the Treasury “shall furnish such committee with any return or return information specified in such request” ― which Democrats believe gives them a strong case. Some had hoped Neal would file the lawsuit earlier since Mnuchin denied his subpoena back in May.

“This long-overdue legal action is needed to keep this bad president from setting a bad precedent,” Ways and Means member Rep. Lloyd Doggett (D-Texas) said Tuesday. “It should not take a court order to affirm that ‘shall’ means ‘shall.’ But Trump will do what it takes to delay the inevitable, hiding his tax returns as long as he can.”

The suit over Trump’s taxes is the latest development in an escalating battle between Congress and Trump, who has vowed to fight “all the subpoenas” looking into his administration and personal finances. Trump is the first modern president not to voluntarily disclose his tax returns.

Trump has claimed executive privilege to block the release of the unredacted report issued by special counsel Robert Mueller and its underlying evidence. He asserted “testimonial immunity” for former White House counsel Don McGahn to not testify. And he sued the House Oversight and Reform Committee to stop its subpoenas of financial information from his accounting firm and bank.

Those last lawsuits filed by Trump in his personal capacity to halt disclosures from Mazars USA LLP, his accounting firm, and Deutsche Bank and Capital One, his former lenders, have already showed that the president is fighting a losing battle.

The district court judges ruling on the two separate cases came to the same conclusion: that Trump’s legal argument that Congress has no legitimate legislative interest in pursuing documents from Mazars, Deutsche Bank and Capital One holds no water. Both judges affirmed Congress’ broad right to subpoena documents for investigative purposes that could lead to legislative action.

“Put simply, the power of Congress to conduct investigations is inherent in the legislative process,” Judge Edgardo Ramos said in his opinion on the Deutsche Bank and Capital One subpoenas on Thursday.

These rulings, now on appeal, were embarrassing defeats for the president and contain arguments that will likely be restated in the tax return case. That’s because the Treasury Department made the same legal argument to deny the committee the president’s tax returns as Trump’s personal lawyers made in the Mazars and Deutsche Bank cases ― that the requesting congressional committee has no legitimate legislative interest in pursuing the documents.

House Speaker Nancy Pelosi (D-Calif.) and her allies in the Democratic Party have pointed to the victories as evidence that regular oversight works and Democrats don’t yet need to escalate to impeachment proceedings against the president. The only problem is that enforcing subpoenas through the courts can take a long time.

House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) has not yet filed a lawsuit against the Trump administration for blocking subpoenas for testimony from McGahn, former White House deputy counsel Anne Donaldson and former White House communications director Hope Hicks. Nadler did ultimately strike a deal with the Department of Justice for access to the unredacted Mueller Report and some of the underlying evidence.

One key difference between the tax return subpoena and the others is that in the tax case Democrats are trying to force the administration to comply with a federal law that explicitly gives the chairs of congressional tax committees access to private tax returns.

When Neal asked for Trump’s tax returns in April, he based the request on a need to evaluate the IRS policy of automatically auditing the president every year, a justification Republicans have called a “pretext” for publicizing Trump’s taxes just to make him look bad.

“Without reviewing the requested return materials,” the committee said in its complaint on Tuesday, lawmakers can’t “ensure that the IRS’s audit process is functioning fairly and effectively, understand how provisions of the tax code are implicated by President Trump’s returns, or exercise its legislative judgment to determine whether changes to the code may be warranted.”

While some of Neal’s Democratic colleagues questioned his decision to wait until April to make the initial request, the lawsuit to enforce the subsequent subpoena is the first case Democrats themselves have taken to court.

Time is of the essence because past congressional efforts to enforce subpoenas have taken years. The legal victories in the Mazars and Deutsche Bank cases are subject to appeal, and it will be many months ― at the soonest ― before any documents are turned over. When a new House convenes with a new set of lawmakers in January 2021, Neal’s subpoena will expire. If the court doesn’t move quickly, the committee said in its suit, it will be unable “to carry out its constitutional obligation to legislate on issues of paramount national importance before the current Congress ends.”

“Trump has been gifted several months of delay in litigation that can never be recovered by the public that voted Democrats into control of the House of Representatives as a check on Trump’s corruption,” said Jeff Hauser, director of the Revolving Door Project at the Center for Economic and Policy Research.

“That delay did nothing to strengthen the House’s already strong legal hand, but can and will be used by Trump as evidence that there is no constitutional urgency here that would warrant a court expediting this case,” Hauser said.

This story has been updated with comment from Rep. Lloyd Doggett, Jeff Hauser, and additional language from the complaint.


What's Hot