How Federalism May Force President Trump To Release His Tax Returns

One of the critical debates at the end of the 1700s was over the extent to which America’s new national government would share power with the country’s pre-existing state governments.

There were some who desired a strong and wide reaching national government, there were others who desired a national government with strong yet limited powers, and there obviously existed many who desired a weaker federal government which would only maintain power over the precise functions that the states themselves could not carry out on their own. The byproduct of each of these sides’ negotiations, compromises, and deals was our Constitution, which arguably appeased portions of each of these groups’ perspectives at the time of its creation. The national government garnered wide ranging responsibilities over commerce, coinage, trade, and taxation; its powers were limited to specific actions enumerated in the Constitution itself; and the states maintained a lot of control as a result of the adoption of the Bill of Rights shortly after the Constitution was ratified.

Of course, a lot has since changed.

In the modern era especially, the balance of power between our country’s state governments and its national government has significantly shifted in a manner that favors the latter. Due to Supreme Court decisions which have expanded the reach of the Constitution’s enumerated powers, and due to the ways in which the national government has seized power from the states through the provision of federal finances with heavy strings attached, the states have recently found themselves in an increasingly subservient position to the national government.

However, state governments are not entirely powerless. There is always the occasional story in which the states fight back against the federal government, and the needle of power moves slightly closer toward a healthy equilibrium for our federalist system. Ironically, the most recent such story involves the state which from the very beginning of our national government’s existence dragged its toes the longest before being the last to ratify the Constitution during the Founding Era.

Rhode Island Strikes Again

On June 19th, Rhode Island’s Senate passed a bill that was sponsored by Senator Galye Goldin. The bill was passed by a vote of 34–3, and, if it later gets passed by the state’s House of Representatives, then presidential candidates would have to release their tax returns in order to be placed on Rhode Island’s ballot.

To provide some context, Rhode Island’s Senate is composed of 33 Democrats and 4 Republicans, and its House is composed of 64 Democrats and 11 Republicans.

The political implications and motivations of this bill appear obvious, and its lead sponsor has not hesitated to hide them. In a statement released after the Senate passed the law on an overwhelmingly party-lined vote, Senator Goldin took direct aim at President Trump:

“Especially considering his vast real estate holdings and the wide reach of his family’s companies and assets, President Trump’s lack of transparency raises significant questions about how he may be personally benefiting from the tax overhaul he promoted and signed. We could not help but question every carve-out for businesses, like those for real estate holdings and allowing the PGA to maintain its nonprofit status, and wonder what his personal benefit is going to be. Because of his refusal to release his returns, we will never know how his personal investments might affect his decisions regarding anything from foreign policy to relations with our neighbors, and that is an affront to the rest of us who are taxpayers. For the sake of ensuring fair government, we should enact our expectation that presidential candidates provide this information to the public.”

Even the General Assembly’s press release contained a statement making the bill’s targeting of President Trump evident:

“Unlike members of Congress, the president is exempt from many conflict-of-interest laws. Except President Trump, every president since Richard Nixon has voluntarily released his tax returns. Tax returns provide information about a candidate’s financial ties to foreign businesses and governments, business arrangements, and other potential conflicts of interest.

While it is widely known that President Trump has done business in many countries with people and firms linked to foreign governments, without his tax returns, it’s impossible to understand the scope of those deals and how they might affect his decisions in office. Additionally, tax documents from 1995 showed that he reported a $916 million loss, which tax experts say could have been used to avoid paying any federal income tax for up to 18 years.

Americans believe the president should release his or her tax returns. Prior to the President Trump’s inauguration, a survey showed that 74 percent of Americans believed he should release his tax returns, including almost half of those who voted for him.”

The issue of presidential candidates releasing their tax returns was obviously a big point of contention in this past presidential election cycle. For clear reasons, President Trump will most likely never sign a national law mandating this state bill’s requirements, and Congress is currently not any more likely to attempt to pass such a law over the president’s veto. But, in our federalist system, the national government does not contain the only political actors with the power to enact and enforce election laws. And, given the sentiment of this Rhode Island bill and the political composition of the state’s legislature, it seems likely that such power will be wielded on the state level in due time.

At the beginning of this article I wrote that state governments have occasionally moved against the federal government in a way that moves the needle of power back toward a politically appropriate equilibrium for our federalist system. To be honest, I am not entirely convinced that this story on its own flawlessly falls into this category.

Disregarding the bill’s motivations, the consequences of this legislation could be twofold with luck.

I say with luck because Rhode Island’s leverage regarding the issue of presidential elections is minimal given its mere four electoral votes. It is entirely within the realm of possibility that Rhode Island passes this law, and President Trump, given his unconventionality, merely keeps his name off of the ballot in that state to get around the release of these personal documents. However, this action may inspire other states (most likely deeply Democratic states like Rhode Island) to attempt to pass identical legislation. Subsequently the release of appropriately redacted tax returns would become a requirement for anybody interested in running for the highest national office, simply because of state-level political action.

If all, or possibly just some, of this were to happen, then the American electorate as a whole will receive a greater level of transparency in its presidential elections. And, more importantly, the American political system more generally be reminded that it exists at more than just one national level.

****

JG

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