    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                   LEGISLATIVE PROPOSALS AND TAX LAW RELATED
                     TO PRESIDENTIAL AND VICE-PRESIDENTIAL
                                  TAX RETURNS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON OVERSIGHT

                                     OF THE

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                FEBRUARY 7, 2019

                                   __________

                                Serial No. 116-3

                                   __________

             Printed for the use of the Committee on Ways and Means

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    35-635                      WASHINGTON : 2020

    --------------------------------------------------------------------------------------

                          COMMITTEE ON WAYS AND MEANS

                    RICHARD E. NEAL, Massachusetts, Chairman

    JOHN LEWIS, Georgia                  KEVIN BRADY, Texas, Ranking Member
    LLOYD DOGGETT, Texas                 DEVIN NUNES, California
    MIKE THOMPSON, California            VERN BUCHANAN, Florida
    JOHN B. LARSON, Connecticut          ADRIAN SMITH, Nebraska
    EARL BLUMENAUER, Oregon              KENNY MARCHANT, Texas
    RON KIND, Wisconsin                  TOM REED, New York
    BILL PASCRELL, JR., New Jersey       MIKE KELLY, Pennsylvania
    JOSEPH CROWLEY, New York             GEORGE HOLDING, North Carolina
    DANNY K. DAVIS, Illinois             JASON SMITH, Missouri
    LINDA SANCHEZ, California            TOM RICE, South Carolina
    BRIAN HIGGINS, New York              DAVID SCHWEIKERT, Arizona
    TERRI A. SEWELL, Alabama             JACKIE WALORSKI, Indiana
    SUZAN DELBENE, Washington            DARIN LAHOOD, Illinois
    JUDY CHU, California                 BRAD R. WENSTRUP, Ohio
    GWEN MOORE, Wisconsin                JODEY ARRINGTON, Texas
    DAN KILDEE, Michigan                 DREW FERGUSON, Georgia
    BRENDAN BOYLE, Pennsylvania          RON ESTES, Kansas
    DON BEYER, Virginia
    DWIGHT EVANS, Pennsylvania
    BRAD SCHNEIDER, Illinois
    TOM SUOZZI, New York
    JIMMY PANETTA, California
    STEPHANIE MURPHY, Florida
    JIMMY GOMEZ, California
    STEVEN HORSFORD, Nevada

                         Brandon Casey, Staff Director

                     Gary J. Andres, Minority Chief Counsel

                                     ______

                           SUBCOMMITTEE ON OVERSIGHT

                         JOHN LEWIS, Georgia, Chairman

    SUZAN DELBENE, Washington            MIKE KELLY, Pennsylvania
    LINDA SANCHEZ, California            JACKIE WALORSKI, Indiana
    TOM SUOZZI, New York                 DARIN LAHOOD, Illinois
    JUDY CHU, California                 BRAD R. WENSTRUP, Ohio
    GWEN MOORE, Wisconsin
    BRENDAN BOYLE, Pennsylvania

                                C O N T E N T S

                                   __________

                                                                       Page

    Advisory of February 7, 2019 announcing the hearing..............     2

                                   WITNESSES

    Joseph J. Thorndike, Director of the Tax History Project, Tax
      Analysts.......................................................    13
    George K. Yin, Edwin S. Cohen Distinguished Professor of Law and
      Taxation, University of Virginia School of Law.................    25
    Steve Rosenthal, Senior Fellow, Urban-Brookings Tax Policy Center    32
    Noah Bookbinder, Executive Director, Citizens for Responsibility
      and Ethics in Washington.......................................    42
    Kenneth J. Kies, Managing Director, Federal Policy Group.........    49

                           SUBMISSIONS FOR THE RECORD

    The Honorable Anna G. Eschoo, statement..........................   171
    The Center for Fiscal Equity, statement..........................   173
    Public Citizen, statement........................................   175
    Americans for Tax Fairness, statement............................   177

                       LEGISLATIVE PROPOSALS AND TAX LAW
                          RELATED TO PRESIDENTIAL AND
                         VICE-PRESIDENTIAL TAX RETURNS

                                  ----------

                           THURSDAY, FEBRUARY 7, 2019

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                                     Subcommittee on Oversight,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 3:16 p.m., in
    Room 1100, Longworth House Office Building, the Honorable John
    Lewis [Chairman of the Subcommittee] presiding.
        [The advisory announcing the hearing follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. The Subcommittee will come to order. I
    regret in the delay. We had some votes on the floor.
        Good afternoon to everybody. Let me begin by congratulating
    the Ranking Member, Mr. Kelly, on his appointment to this
    Subcommittee. I hope that we will continue the good and
    thoughtful work on behalf of the American taxpayers. We have
    been called. We have been chosen to lead at this time in our
    history.
        I would also like to welcome the new and returning Members
    of the Oversight Subcommittee. I look forward to working with
    each and every one of you in the 116th Congress.
        During today's hearing, we will examine a topic of great
    interest to the American people. We will review whether a
    President, vice president, or any candidate for these office
    should be required by law to make their tax return available to
    the public. In other words, we will ask the question: Does the
    public have a need to know that a person seeking or holding the
    highest office in our country obeys the tax laws?
        To help inform our thinking, we will review the voluntary
    release of tax return by Presidents and others. The Federal tax
    laws that protect taxpayer's information recent bill, including
    H.R. 1, that would require Presidents and vice presidents to
    disclose their tax return, an Internal Revenue Service tax
    return filed by President and vice president.
        This afternoon, I am reminded that over 45 years ago, we
    were in a situation that is not much different than today. Many
    of you are old enough to remember when President Nixon faced
    questions about his Federal income taxes. During a press
    conference call for review by Congress of his return, he said,
    In all of my years of public life, I have never profited, never
    profited from public service. And in my many years of public
    life, I welcome this kind of examination, because people have
    got to know whether or not their President is a crook.
        He concluded by saying, Well, I am not a crook, even though
    the IRS wrote him a letter stating his return wasn't correct.
    The investigation by Congress found that he owed almost
    $480,000 in tax and interest.
        The question that arose then and remain today are, first,
    should the public know whether a person who is running for the
    office or who is currently leading our Nation paid the correct
    amount of tax? In the case of Nixon, the answer was yes.
        Secondly, is it fair to expect the IRS to enforce Federal
    tax law against the President who is the head of the executive
    branch and has final control of the agency? In the case of
    Nixon, the answer was no.
        These and other grave questions require thoughtful and
    serious consideration. We have to do the right thing. We are
    called to do the right thing. We have been selected. We have
    been chosen.
        I thank our experts for joining us today, and I look
    forward to their testimony.
        [The prepared statement of Chairman Lewis follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. Now I am pleased to recognize the Ranking
    Member for his opening statement, Mr. Kelly.
        Mr. KELLY. Thank you, Mr. Chairman, and thanks for holding
    this hearing today.
        As this is my first hearing as Republican leader on the
    Oversight Committee, I want to start by saying that I very much
    look forward to working together with you, as well as other
    Members of the Subcommittee, specifically on issues of
    bipartisan concern.
        Personally, I must say that when I found out we would be
    serving together on this Committee, I was particularly
    delighted. I so fondly remember our time in Alabama as we
    walked across the Edmund Pettus Bridge with my grandson back in
    March of 2015 to mark the 50th anniversary of the Selma to
    Montgomery march. At that time, George was 8 years old, and you
    were so gracious with him. We have many pictures of the two of
    us talking with George.
        And one of the things that George and I talked about, I
    said, Georgy, you and I are going to come back for the 100th
    anniversary of the bridge and we are going to walk across
    together. He said, well, Grandpa, how old are you now? I said,
    I am 65. He said, Grandpa, you are going to really be old. And
    I said, well, maybe you can push me across the bridge.
        But you took time to spend with that little 8-year-old, and
    he still has those pictures and those memories to go with it.
    So serving with you on this Committee is phenomenal.
        And I know that you and Chairman Jenkins had a good working
    relationship, particularly with things like the bill to
    redesign the IRS. And I would like to continue to build upon
    that foundation in this Congress also.
        The primary role of this Subcommittee, I believe,
    Government Oversight, is an important role for every Member of
    Congress, because we are the taxpayers' watchdogs here in
    Washington as well as being legislators. Government oversight
    is critical to the protection of taxpayers and the safety of
    all Americans.
        As Senator Grassley once said, oversight is about keeping
    faith with the taxpayers and giving people confidence that the
    government plays by the rules or is held accountable. That is a
    role I hope to play on this Committee, and I look forward to
    serving with you in this capacity, Mr. Chairman.
        Now, for today's hearing, I want to start by stating the
    obvious. All Americans, every single American has a right to
    the privacy and of the personal information contained in their
    tax return. That is why we have a statute in law, 6103, that
    covers every American from the President to your next-door
    neighbor and your family. It mandates that the Federal
    Government must keep tax returns and tax return information
    private.
        Congress enacted taxpayer protections that are embedded in
    Section 6103 of the Tax Code to ensure every American's privacy
    and to prevent the use of taxpayer information from being made
    public. Americans should be able to trust that the Federal
    Government or some unelected bureaucratic in Washington is not
    going to publicly release their tax returns without the
    taxpayer's consent.
        Tax returns can have a lot of sensitive information in
    them. It is not just all income, expenses, and deductions.
    There is information on where you live, what you do for a
    living, what kind of car you drive, information on your bank
    account, which cell phone is yours, whether you have health
    insurance, and the names and Social Security numbers of your
    spouse and all of your children.
        Keeping this information confidential is critical to the
    integrity of the U.S. tax system, which is only functional
    because taxpayers voluntarily pay their taxes. According to the
    National Taxpayer Advocate, 98 percent of all tax revenue paid
    by American taxpayers is paid voluntarily. That means that only
    a small, percentage, 2 percent of taxes are collected through
    audits and enforcement. Ninety-eight percent is voluntarily
    paid. Ninety-eight percent of anything is a lot.
        So I have to take a closer look and ask why. I believe this
    is because of the trust the American taxpayers have in our
    system and that privacy is at the foundation of that trust.
        Now, some of my colleagues on the other side of the aisle
    have suggested using this Committee as an avenue to obtain and
    release the President's tax returns in the name of
    transparency. As leaders of the Ways and Means Committee, I
    don't believe we have to choose between protecting privacy and
    promoting transparency among public officials. To begin with,
    Congress is prohibited by law from examining and making public
    the private tax returns of Americans for political purposes.
    Such an abuse of power would open a Pandora's box, and it would
    be tough to get a lid back on. It would set a very dangerous
    precedent.
        And the question is where does it end? What about the tax
    returns of the Speaker, the Members of Congress, or Federal
    employees or, for that matter, any political donors? There is
    no end in sight for those whose tax information may be in
    jeopardy.
        Thankfully, violating taxpayer privacy is not the only
    option for increasing transparency. I support the current
    ethics review in place which ensure that Presidents and vice
    presidents are held accountable to taxpayers. My colleagues on
    the other side of the aisle have voiced the need to have
    experts review the President's tax return with a fine-tooth
    comb. But isn't that the exact reason why the IRS, the agency
    with just that level of expertise, conducts mandatory audits of
    the President and vice president every year? Yes, that's right,
    the IRS audits the President and the vice president every
    single year, whether he or she is a Republican or a Democratic.
    I don't think most Americans know that is the case. I certainly
    didn't know it until I started doing some research myself and
    inquiring.
        In addition to IRS audits, there are also financial
    disclosures required. If my colleagues have a valid concern
    with the financial disclosure requirements, then let's come
    together to legislate a thoughtful solution to require
    additional disclosures. If there are challenges in obtaining
    required documents for disclosure, then let's look at how we
    can make that process better and more transparent. But the
    reckless sharing of a taxpayer's private information for
    political purposes would be unprecedented and completely
    outside the bounds of Congress' role as a legislative body.
        Our role is oversight and certainly not overreach. And we
    can and must do better. Therefore, I look forward to hearing
    from our witnesses on how to do that better, that is, how to
    best protect our American taxpayers.
        Thank you, Mr. Chairman. It is great to be with you.
        [The prepared statement of Mr. Kelly follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. Well, thank you, Mr. Kelly. And thank you
    for your wonderful comments about our trip to Alabama with your
    grandson George.
        Mr. KELLY. Yes, with George.
        Chairman LEWIS. Without objection, all Members' opening
    statements will be made part of the record.
        Now we will hear from our panel. I ask that each of you
    limit your testimony to 5 minutes. I know you have been so
    patient. You have been waiting for a long time. So you can, you
    know, cut it as short as possible. We will not object. Without
    objection, your entire statement will be included in the
    record.
        It is now my pleasure to introduce the director of the Tax
    History Project, Mr. Joseph Thorndike.
        You may begin, sir.

     STATEMENT OF JOSEPH J. THORNDIKE, DIRECTOR OF THE TAX HISTORY
                         PROJECT, TAX ANALYSTS

        Mr. THORNDIKE. Good afternoon, Chairman Lewis, Ranking
    Member Kelly.
        Chairman LEWIS. I should have said Dr. Thorndike.
        Thank you, Doctor.
        Mr. THORNDIKE. Thank you.
        It is an honor and privilege to be here today to talk about
    the long voluntary tradition of tax return disclosure by
    American Presidents, vice presidents, and major party nominees.
        As has been said, I am Joseph Thorndike, director of the
    Tax History Project at Tax Analysts, a nonprofit, nonpartisan
    provider of tax information. As part of my job, I am the
    curator of a collection--an electronic collection of
    Presidential tax returns. I speak today on my own behalf, not
    for any organization.
        I will be making two main points. First, for more than 40
    years, American Presidents have been making substantial
    voluntary disclosures of personal tax information. Since 1977,
    those disclosures have been annual, with each sitting President
    releasing a complete tax return. Disclosures by vice presidents
    have been nearly as consistent. And major party nominees, while
    generally restricting their disclosures to campaign years, have
    also released at least one complete tax return and sometimes
    many more.
        This unbroken string of disclosures ended in 2016 when
    first candidate and then President Donald Trump declined to
    release any personal tax information.
        Secondly, this tradition of voluntary tax disclosure is
    fragile. By its nature, a tradition can lack clear standards
    and procedures. It tends to vary and change and perhaps to even
    weaken over time. Some political leaders have resisted or
    dragged their feet about disclosure. Until 2016, all ultimately
    chose to comply. But absent clear, binding, bright-line
    requirements, the nature of that compliance has varied
    considerably. That variability has underscored the
    vulnerability of the tradition itself.
        Let me talk just briefly about origins, which the chairman
    has already mentioned. Rarely does the hand of history weigh
    quite so heavily on current policy as it does around this
    topic. Over the past four decades, American politicians have
    been releasing their personal tax returns because President
    Nixon chose to release his personal tax returns, albeit under
    some duress.
        Nixon's tax troubles came to light in a lawsuit that
    happened to mention a large deduction he had taken for the
    donation of his vice presidential papers to the National
    Archives. That revelation gave rise to months of speculation
    and ultimately a leak from within the IRS. To help quell the
    scandal, Nixon released 4 years of personal returns and invited
    the Joint Committee on Internal Revenue Taxation, as it was
    then called, to examine those returns. It is worth noting that
    Nixon made this release while already under audit by the
    Internal Revenue Service.
        Beginning with Jimmy Carter, every President through Barack
    Obama has opted to release a complete tax return during each
    year in which he has held office. The same is true for vice
    presidents since Walter Mondale, including Vice President
    Pence.
        Similarly, beginning in 1976 and continuing through 2012,
    every major party nominee and his or her running mate has made
    at least one significant disclosure. From 1980 to 2012, these
    have included at least one complete tax return and sometimes as
    many as 30.
        While Presidents, vice presidents, and major party nominees
    have generally observed the tradition of disclosure, there have
    been occasional issues, especially around the disclosure of tax
    returns filed by candidate spouses, some of which have included
    partnership and business returns that those spouses were
    disinclined to release.
        In addition, the 2016 election featured numerous incomplete
    tax disclosures with candidates from both parties opting to
    release just the Form 1040 rather than a complete return. It
    bears notice that if Nixon had released only his Form 1040 in
    1973, investigators would have been unable to discover the most
    serious problems with his returns.
        I would like to turn briefly to the subject of these
    Presidential audits that have already been mentioned. In 1977,
    the IRS established new procedures, still in force, requiring
    an annual audit for every President and vice president while in
    office. According to IRS officials at the time, the policy was
    established in light of, quote, everything that has happened.
        The past in question was Nixon's, and the Nixon returns had
    actually been audited twice, the second audit finding numerous
    serious problems. The first had found none and it instead
    concluded with a commendation for the President from the IRS
    for the care shown in the preparation of his returns. A routine
    politeness maybe, but one that was disconcerting in retrospect.
        And indeed, that episode underscored a key question both at
    the time and now: Can we rely on the IRS to fairly and
    vigorously enforce the tax laws when applied to a President?
    Doubts about the answer to that question are what prompted
    Nixon to make his release essentially allowing for what we
    would today call a crowdsourced backstop to the IRS audit. And
    until recently, that backstop remained in place.
        In conclusion, I believe that the four-decade tradition of
    return disclosure is clearly imperiled most seriously by
    President Trump's refusal to release his returns, but also by
    the growing popularity of these partial disclosures. I believe
    we would all be better off, candidates, the news media,
    historians, and public, if this informal tradition were
    transformed into something more substantial, well-defined, and
    legally binding.
        Absent clear standards and procedures, a tradition can be
    interpreted, manipulated, and ultimately diminished by anyone
    reluctant to observe it. And the indeterminacy of a tradition
    is also an invitation to endless begging, pleading, and
    shaming, none of which is good for the body public.
        I am happy to answer anybody's questions.
        Chairman LEWIS. Thank you very much.
        [The prepared statement of Mr. Thorndike follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. And now we will hear from a distinguished
    professor of law, Professor Yin, from the University of
    Virginia.

       STATEMENT OF GEORGE K. YIN, EDWIN S. COHEN DISTINGUISHED
    PROFESSOR OF LAW AND TAXATION, UNIVERSITY OF VIRGINIA SCHOOL OF
                                  LAW

        Mr. YIN. Thank you, Mr. Chairman, Ranking Member Kelly,
    other Members of the Subcommittee and Committee. I am a law
    professor at the University of Virginia and a former chief of
    staff of the Joint Committee on Taxation. My testimony concerns
    the existing authority of the Committee to obtain and disclose
    the tax return information of any taxpayer, including the
    President, vice president, and any business that they own. I
    have three points to make.
        First, the chairman of the Committee may request the tax
    return information of any taxpayer from the Treasury Secretary,
    who is obligated to furnish it. I don't see any wiggle room in
    this statute for the Secretary to refuse a request. I believe
    Congress drafted the authority without conditions, to match the
    unrestricted right of the President at the time to access and
    disclose any tax return.
        Should the Secretary refuse, we would be in unchartered
    territory. The authority appears to have been rarely invoked
    since its creation in 1924, and I know of no instance when a
    request has been refused. If a court were to become involved,
    it might look to precedents involving congressional enforcement
    of a subpoena. Those cases generally indicate that Congress
    must act with a legitimate purpose, meaning, generally, a
    purpose consistent with its constitutional responsibilities.
    The chairman, therefore, would be well advised to request tax
    return information only if he has a legitimate purpose.
        Secondly, if it has a legitimate purpose, the Committee may
    submit any tax return information to the House. The present
    statute places no condition on this authority. But as
    originally passed in 1924, the Committee could submit only,
    ``relevant or useful,'' information to the House, words that
    were removed by technical amendment in 1976.
        In recent research, I examined the meaning of these words
    very closely and concluded that they require the Committee to
    have, at a minimum, a legitimate purpose for submitting tax
    return information to the House. I also concluded that the
    meaning did not change even after the removal of the words in
    1976. I believe the amendment in 1976 was a mere technical
    drafting change with no substantive effect.
        In short, the Committee must have a legitimate purpose to
    submit tax return information to the House. Since the
    submission might result in public disclosure, the Committee
    should act only if it has a legitimate purpose to disclose the
    tax information to the public.
        Finally, since 1976, the tax committee authority to obtain
    and submit tax return information is the sole means by which
    Congress can make public disclosures of such information. The
    authority, therefore, should be interpreted in a manner that
    does not frustrate Congress' informing function with respect to
    such information.
        I provide an example in my testimony of why the legitimate
    purpose for tax committees to act should not be limited only to
    purposes within the specific legislative jurisdiction of the
    Committee. Rather, a permissible purpose should include any
    responsibility given to Congress under the Constitution.
        Congress, in effect, placed tax return information in a
    locked safe in 1976, but it preserved one key for purposes of
    disclosing the information to the public. It gave that key to
    the tax committees. The law, therefore, should be interpreted
    to enable the tax committees to use that key in appropriate and
    necessary circumstances.
        Thank you very much.
        Chairman LEWIS. Thank you very much, Professor Yin, for
    your testimony.
        [The prepared statement of Mr. Yin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. Now, it is my pleasure to present Steven
    Rosenthal, a senior fellow at the Tax Policy Center.
        You may begin, sir.

     STATEMENT OF STEVE ROSENTHAL, SENIOR FELLOW, URBAN-BROOKINGS
                           TAX POLICY CENTER

        Mr. ROSENTHAL. Chairman Lewis, Ranking Member Kelly,
    Members of the Subcommittee, and other Members of the Ways and
    Means Committee, thank you for inviting me to speak today on
    disclosing Presidential and vice presidential tax returns. My
    name is Steve Rosenthal. I am a senior fellow at the Tax Policy
    Center. I am speaking only on my own behalf, and my views
    should not be attributed to any other organization or person.
        I would like to highlight three points for my testimony.
    First, disclosing tax returns of Presidents, vice presidents,
    and candidates for these offices is important because it
    increases public confidence in the government in support for
    our voluntary tax system. As Ranking Member Kelly observed, our
    tax system is based on self-assessment. For it to work
    properly, taxpayers must be confident that it is fair.
        In my view, disclosure of tax returns to the public can
    help. Tax returns reveal effective tax rates, which is the
    amount of taxes divided by taxable income. Effective tax rates
    are useful to measure whether a taxpayer makes a fair share
    payment of taxes. Tax returns also show to the dollar the
    source and nature of income, losses, and deductions.
        Secondly, tax return information and other tax information
    of Presidents and vice presidents enhances the ability of
    Congress to oversee the executive branch, which is critical to
    our checks and balances. Congress may, for example, use tax
    information to evaluate the fairness of IRS audits, investigate
    potential financial conflicts, or to develop new tax
    legislation or other legislation.
        Thirdly, there are two paths to obtain tax information on
    Presidents and vice presidents. As Professor Yin has observed,
    existing law, section 6103(f) of the Tax Code, permits the
    Committee on Ways and Means to request tax information on
    Presidents or vice presidents that is held by the IRS. And new
    legislation, like H.R. 1, would require Presidents and vice
    presidents to disclose a minimum number of years of tax
    returns. Both paths are important, in my view.
        The existing Tax Code permits the Committee to request tax
    returns and other information held by the IRS. The scope of the
    Committee's request would be based on its purpose for the tax
    information. Some information, such as IRS audit work papers,
    would help the Committee evaluate the fairness of an IRS audit.
    Other information, such as related business and trust returns,
    would help identify potential financial conflicts. After
    reviewing the information, the Committee could exercise its
    discretion to determine whether and how to release it.
        Now, new legislation such as H.R. 1 can require Presidents
    and vice presidents to disclose publicly a minimum number of
    years of tax returns, but Congress cannot anticipate all of the
    information to require in the future. It may not foresee how a
    future President will make his or her income or what potential
    conflicts may arise. But Congress could still use section
    6103(f) to obtain extra years of returns or wider information
    on a President or vice president, if appropriate.
        In summary, the public would benefit from the disclosure of
    tax returns of Presidents and vice presidents and candidates
    for these offices. Congress would help fulfill its oversight
    responsibilities by obtaining tax information, and of
    presidents and vice presidents as appropriate. And there are
    two paths to obtain the tax information: One in existing law
    and one in proposed legislation. And in my view, both are
    important.
        I am happy to take any questions. Thank you.
        Chairman LEWIS. Thank you for your testimony.
        [The prepared statement of Mr. Rosenthal follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. Now it is my pleasure to present Mr. Noah
    Bookbinder. Thank you for being here. I think I remember in
    another time, another period, your father.
        Thank you for being here.

    STATEMENT OF NOAH BOOKBINDER, EXECUTIVE DIRECTOR, CITIZENS FOR
                RESPONSIBILITY AND ETHICS IN WASHINGTON

        Mr. BOOKBINDER. Chairman Lewis, Ranking Member Kelly,
    Members of the Committee, thanks so much for the opportunity to
    appear before you today to talk about key reforms included in
    H.R. 1, the For the People Act.
        My organization, Citizens for Responsibility and Ethics in
    Washington, or CREW, focuses on reducing the negative influence
    of money in politics, promoting ethics in government, and
    increasing transparency in our institutions. In all of these
    respects, the For the People Act is a vital first step in
    restoring trust in our democratic systems.
        I am here today to speak to one aspect of this important
    legislation: the need for transparency in Presidential and vice
    presidential tax returns. As others on the panel have
    explained, President Trump's continuing refusal to release his
    tax returns is a departure from the practice of candidates and
    Presidents of both parties over the last 40 years. The For the
    People Act would codify this commonsense principle of good
    governance for Presidents and vice presidents.
        There are a number of important things the public can learn
    from a President's or vice president's tax return. For example,
    the President could be concerned with whether the President,
    vice president, or a candidate paid his or her fair share of
    taxes. And if this seems like a far-fetched consideration, it
    is worth recalling the recent blockbuster report that President
    Trump's family appears to have engaged in an elaborate decades-
    long tax avoidance scheme. Or the public could want to know
    more about how a President or vice president approaches
    charitable giving. In the case of President Trump, the public
    would be able to build on CREW's work and the subsequent work
    of New York's attorney general investigating how the President
    may have misused his now defunct charitable foundation.
        However, I would like to highlight one critical function of
    Presidential and vice presidential tax transparency: to
    identify and publicly expose potential financial conflicts of
    interest. If not addressed, these conflicts cast doubt on every
    aspect of a President's job. The past 2 years have demonstrated
    this in vivid detail. The public cannot currently have
    confidence in President Trump's decisions because his finances
    remain opaque. We cannot know if his decisions are made in the
    public's interest or in his own financial interest because we
    don't know what his financial interests are. These unknowns are
    particularly troubling given President Trump's decision to
    maintain ownership of his businesses while serving as
    President.
        Understanding President Trump's financial interests could,
    for example, shed light on exactly how he and his businesses
    will be affected by the massive tax legislation he championed
    last year. It could help us understand whether he is receiving
    funds from foreign sources, be they Russian, Saudi Arabian,
    Chinese, or otherwise. Or we could learn other things about his
    finances that we haven't even thought to ask yet. Ultimately,
    tax transparency would open the public's eyes to investigative
    threads that could lead to greater accountability for the
    occupants of our Nation's highest offices.
        The example of President Trump's tax returns demonstrates
    one way in which the current provisions in H.R. 1 should
    actually go further. Simply obtaining the President's
    individual tax returns will not necessarily shine light onto
    the hundreds of distinct corporations he owns under the
    umbrella of the Trump organization. It is equally, if not more
    important, to obtain the President's business tax returns,
    something that this legislation does not currently require. I
    would be happy to work with the Committee to update the
    legislation to include such a requirement.
        One justification President Trump has provided for not
    disclosing his tax returns is that his returns are under audit.
    As many have noted, this did not stop others in the past,
    including even President Nixon, from releasing their tax
    returns. But more importantly, Congress should consider whether
    the existing requirement that the IRS audit every President's
    and vice president's tax returns can realistically serve its
    purpose. Congress must question whether we can have full
    confidence in the IRS, which is overseen by a Presidential
    appointee, to thoroughly review the President's taxes.
        Public disclosure of the President's and vice president's
    tax returns can substantially mitigate these concerns. If the
    public can ultimately see what is filed, the IRS can be
    protected against charges that it was too easy or too hard on
    the President. Public review also has the added benefit of
    giving the American people a greater ability to evaluate the
    decisions made by the President and any conflicts that may
    affect these decisions, something an IRS audit cannot provide.
        I will close by reiterating an important point. By ensuring
    the transparency of Presidential and vice presidential tax
    returns, H.R. 1 would not only impact this current President,
    it would force every President and vice president and every
    major candidate for these positions in the future, regardless
    of party, to publicly disclose this information. This provision
    is nonpartisan.
        We must ensure the transparency we need at the highest
    levels of government in order to restore faith that our leaders
    are acting in the interest of the American people, not in their
    own interest. For all of these reasons, Congress should
    implement and indeed strengthen the tax return provision in
    H.R. 1.
        Thank you for the opportunity to address the Subcommittee
    today. I am happy to answer any questions Members may have.
        Chairman LEWIS. Thank you very much, Mr. Bookbinder. Good
    to see you.
        [The prepared statement of Mr. Bookbinder follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. Now it is my pleasure to welcome a
    gentleman back to the Committee who is not a stranger, Mr. Ken
    Kies, the managing director of the Federal Policy Group.
        You may begin, sir.

    STATEMENT OF KENNETH J. KIES, MANAGING DIRECTOR, FEDERAL POLICY
                                 GROUP

        Mr. KIES. Thank you. Thank you.
        Chairman Lewis, Ranking Member Kelly, and distinguished
    Members of the Subcommittee, and also Members of the Ways and
    Means Committee, I am the managing director of the Federal
    Policy Group. Thank you for inviting me to speak on tax law
    related to Presidential and vice-presidential tax returns.
        During my time in governmental service as chief of staff of
    the Joint Committee on Taxation, as well as when I was the
    chief Republican tax counsel of Ways and Means, I have had the
    occasion to review the law surrounding the handling and
    disclosure of tax return information, as well as to advise
    Members of Congress with respect to thereto. And my comments
    today are informed by this experience.
        Section 6103(a) of the Internal Revenue Code specifically
    provides, quote, returns and return information shall be
    confidential, and except as authorized by this title, no
    officer or employee of the United States shall disclose any
    return or return information obtained by him in any manner in
    connection with his service as such an officer or employee or
    otherwise under the provisions of this section.
        The code provision has sometimes been described as a
    general prohibition on the disclosure of tax returns and tax
    return information. While I agree that the provision does
    prohibit disclosure, I note that the characterization of this
    rule as a general restriction is somewhat misleading. Instead,
    I would describe the provision as a blanket rule against
    disclosure by any authorized recipient of returns, with
    disclosure allowed in some limited situations that I will
    describe later.
        For purposes of this hearing, an even more relevant aspect
    of the blanket restriction as it pertains to Members of
    Congress and their staff is that the prohibition rule
    explicitly refers to returns obtained, quote, in any manner
    with any Member of Congress or employed by one, including
    returns that were obtained under the provisions of this
    section. This is a crucial point to remember when considering
    how the blanket rule against disclosure of returns relates with
    the limited exceptions provided in this section.
        Just because a Member of Congress or employee of such
    Member is entitled to have returns disclosed to him or her,
    that Member or employee is still prohibited from then
    disclosing the returns to another, unless further disclosure is
    explicitly allowed by reason of this section. To willfully do
    otherwise is to commit a felony punishable by up to 5 years in
    prison.
        As for the exception that is relevant to Members of
    Congress and their staff, I read the plain language of section
    6103(f) and find no comfort whatsoever that any public
    disclosure of tax returns is clearly permitted. A sentence in
    section 6103(f) does refer to one of the three listed
    committees submitting returns it has received to the Senate or
    House or both. This sentence explicitly says nothing about
    permitting disclosure to the public. It likewise says nothing
    about public disclosure being permitted when Members have a
    valid legislative purpose and does not say that the permissive
    disclosure to the Senate or House overrides the blanket
    restrictions.
        Thus, since every disclosure of returns is prohibited
    unless it is explicitly allowed, the only conclusion I could
    feel safe adopting is the disclosure can be made by a listed
    committee to the House or Senate Members generally but that
    such disclosure can go no further unless permitted by some
    other section of which there is no relevant part.
        Further, while I acknowledge the existence of a colorable
    argument that the so-term speech and debate clause of the U.S.
    Constitution could prevent prosecution of a Member of Congress
    or staff member for a violation of the tax return
    confidentiality rules so long as the act was undertaken in
    furtherance of the performance of their legislative tasks, I
    would observe that this clause has never been tested or applied
    by the Supreme Court in the context of a felony violation under
    Section 6103. Thus, if I were advising a Member of Congress and
    any of their staff, I would tell them I could provide them no
    firm comfort on what this clause actually allows them to do
    with respect to tax returns when they have legally received
    them under Section 6103. In my mind, the risk to such Members
    and staff is grave when one considers the potential penalties.
        Given everything I have briefly described above, I would
    never feel comfortable advising a client that he or she could
    safely disclose, let alone make public, any tax return in a
    manner that was not unequivocally enumerated in Section 6103.
    In my capacity as chief of staff of the Joint Committee on
    Taxation, I never did so nor would I have counseled any of my
    staff, any Member of Congress, or any congressional staff to
    ever do so.
        That concludes my formal remarks. I thank the Subcommittee
    for this attention, and I welcome any questions.
        Chairman LEWIS. Thank you very much, Mr. Kies, for being
    here.
        [The prepared statement of Mr. Kies follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman LEWIS. I want to thank each member of the panel
    for being concise. And we want you to continue to give a short
    answer.
        The hearing is now open for questions. I ask that each
    Member follow the 5-minute rule. And all Members should have an
    opportunity to ask and answer questions, if we follow the 5-
    minute rule. That is for the panel also. Okay?
        Professor Yin, does the tax law provide any basis for the
    Secretary of the Treasury to refuse a request for tax
    information from the Committee?
        Mr. YIN. The statute provides no basis for a refusal.
        Chairman LEWIS. Furthermore, Professor Yin, can a person
    release his or her tax return while under audit?
        Mr. YIN. I know of no restriction that would prevent a
    taxpayer from disclosing information even if it is under audit.
        Chairman LEWIS. Well, we have heard some people say, I have
    been audited and I cannot release any information.
        Mr. YIN. Well, I think that if I were advising a client and
    my client's return were under audit, I may well want to have
    the client not share the information very broadly. And I would
    provide that advice to the client. But if the question is:
    there anything under the law that would prevent a taxpayer from
    disclosing information that is under audit, the answer is I
    don't know of any such prohibition.
        Chairman LEWIS. Thank you very much, Professor.
        I now yield my remaining time to Mr. Pascrell. You have
    been a leader in this effort.
        Mr. PASCRELL. Thank you, Mr. Chairman. Thanks for holding
    the hearing, and thanks for your courtesies.
        Every President should release his or her tax returns to
    the public as a matter of course. And when we have cause for
    concern over conflicts of--or tax violations, we have every
    reason to use the authority given to this Committee. The law is
    on our side. 6103 is very clear. 6103(f) is even clearer, that
    section of it, of what we have the responsibility to do. For 2
    years, I have been highlighting this Committee's authority to
    do so.
        We introduced the Presidential Tax Transparency Act along
    with Representative Anna Eshoo of California. Our bill would
    require every Presidential and vice presidential candidate to
    release their tax returns to the public. I am pleased our
    proposal is part of H.R. 1, the first bill introduced by
    Democratic Members of the House in this Congress.
        This Committee has oversight over our Nation's tax system
    and laws. In fact, the Ways and Means Committee has oversight
    over IRS. Our tax system requires honesty from taxpayers and
    from the IRS.
        The element of good faith is implicit to a functioning tax
    system. If a President is cheating the system or evading taxes
    or otherwise violating the tax laws of our country, why should
    any citizen feel compelled to comply? No one is above the law.
        I want to get into questions, because we have great
    witnesses who have laid it out better than I can. But before I
    do, I want to enter into the record, Mr. Chairman, with your
    approval, three specific articles that I think go to the very
    center, the very heart of this issue. And we're introducing
    them now.
        I ask unanimous consent to enter into the record the
    chronology of actions taken by this Committee and by the full
    House by using 6103 to obtain the President's tax returns so
    that the record has that. The record illustrates the broad
    support.
        Chairman LEWIS. Without objection.
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. PASCRELL. Thank you. Mr. Rosenthal have you ever looked
    at a President's tax returns? And if so, what did you find,
    since you participated in that expose last summer in the New
    York Times, to some degree? What did you find, Mr. Rosenthal?
        Mr. ROSENTHAL. So I have worked at the Tax Policy Center
    for 7 years. I have been through two Presidential cycles.
        Mr. PASCRELL. Could you speak up, please.
        Mr. ROSENTHAL. I have worked at the Tax Policy Center for 7
    years. I have been through two Presidential cycles. I have been
    asked many a questions about what has been released by
    candidates and officeholders.
        With respect to, say, President Trump, I have seen or at
    least believe to have seen his 2005 and 1995 returns which, in
    my judgment, showed some aggressive tax planning. I spent a lot
    of time with The New York Times and other media helping to
    translate what you see when you find glimpses of an
    officeholder's tax returns. And we have been able to determine,
    in some instances using other court documents and the like, for
    instance, the most likely source of the $916 million of losses
    that the President generated in the 1990s and could have
    eliminated his taxes for a couple of decades.
        So I have seen a lot, and I have published my findings in
    various periodicals, and there is a lot to find.
        Mr. PASCRELL. Mr. Chairman, thank you for yielding, and I
    appreciate it very much. We will be back later.
        Chairman LEWIS. Thank you very much.
        I understand now that Mr. Kelly would like to defer till
    later.
        I now recognize the gentlelady from Indiana for 5 minutes.
        Mrs. WALORSKI. Thank you, Mr. Chairman. Thank you to you
    experts that are here. We so much appreciate it. I am grateful
    for the information you bring with you.
        I would like to direct my question to Mr. Thorndike. Are
    Presidential candidates required to release their tax returns?
        Mr. THORNDIKE. No, they are not.
        Mrs. WALORSKI. In your experience researching the history
    of Presidential returns, is there a set of rules that governs
    what Presidential candidates do and do not have to release?
        Mr. THORNDIKE. There are no written rules. There are norms,
    but that is hard to describe them as, like, well defined.
        Mrs. WALORSKI. Or required. Right.
        So Presidential candidates can choose what tax return
    information, if any, to release. Isn't that correct?
        Mr. THORNDIKE. Yes. And, indeed, they have, which is why
    they have varied quite so dramatically over time.
        Mrs. WALORSKI. So, Mr. Thorndike, how many years of returns
    is typical for a Presidential candidate to release?
        Mr. THORNDIKE. It is really not possible to answer that
    word typical--with anything. I mean, it ranges from 1 to 33.
        Mrs. WALORSKI. So there is no set number.
        Mr. THORNDIKE. And there is not even, really, a trend. I
    mean, there are some single releases in the beginning. There
    are a couple recently that released only two. But Jeb Bush
    released 33 this last time around.
        Mrs. WALORSKI. Right. There is no set number.
        Mr. THORNDIKE. There is no obvious trend.
        Mrs. WALORSKI. Right. Then in the 40-plus years of
    Presidents and Presidential candidates releasing their returns,
    have they ever released the returns of businesses in which they
    have some form of involvement, that you are aware?
        Mr. THORNDIKE. So I cannot answer that question
    definitively, because we don't actually have a lot of those
    returns which were released as part of a campaign but are not
    archived anywhere, so we don't know where they are anymore.
        Senator Romney did--when he ran, he did release returns for
    some of his family trusts. Those are the only ones that I am
    certain about.
        There are a few times when candidates or, more
    specifically, the spouses of candidates have refused to release
    tax returns related to trusts or other businesses. Once
    Geraldine Ferraro's husband and then again Senator Kerry's
    wife.
        Mrs. WALORSKI. But to summarize your responses, Mr.
    Thorndike, Presidential candidates are not required to release
    their returns. There is no standardized process for releasing
    Presidential returns. The level of disclosure varies widely,
    and business income tax returns have not been a part of the
    disclosure process.
        So, really, Mr. Thorndike, what we are talking about here,
    and I believe you called this voluntary disclosures, what we
    are talking about here is an informal tradition. It is not a
    law.
        Mr. THORNDIKE. It is not a law. And it is an informal
    tradition, a long one, but as I say in my testimony, I think
    those sorts of traditions are not the way to handle these sorts
    of issues. If we believe that this kind of disclosure is
    important enough that we want them to do it, then we should
    require it. If we don't think it is that important, then we
    don't need to require it. I don't think we should let a
    tradition handle it.
        Mrs. WALORSKI. And yet we are holding this hearing today
    under the guise of an academic discussion when in reality this
    is all about weaponizing our tax laws to target a political
    foe. Doing this, I believe, sets a dangerous precedent, eroding
    the very laws put in place to protect the private tax return of
    each and every American.
        Privacy and civil liberties should still matter in this
    country. And I, for one, am here to protect those, every single
    individual in this country, every single American.
        And with that, Mr. Chairman, I yield back.
        Chairman LEWIS. Pursuant to the committee rule 14, and
    based on the Members in attendance, we will question the
    witness two Democrats to one Republican.
        The chair now recognizes Ms. DelBene.
        MS. DELBENE. Thank you, Mr. Chairman. And thanks to all our
    witnesses for taking your time to be with us today.
        I want to start with you, Mr. Kies. Given your testimony,
    would you have advised Committee Republicans to release
    taxpayer information in 2014?
        Mr. KIES. No, I would not have advised them to do that.
        Ms. DELBENE. Thank you. Also, current policy requires that
    Presidential tax returns be automatically reviewed, but I am
    concerned that the IRS may not have the ability to accurately
    and fairly carry this out free from political pressure.
        So, Professor Yin, according to the report on the
    impeachment hearing, President Nixon reportedly received a
    letter from the IRS stating, quote, our examination of your
    income tax returns for the years 1971 and 1972 reveal that they
    are correct. I want to compliment you on the care shown in the
    preparation of your return, end quote.
        Upon exam, a congressional investigation found that
    President Nixon actually owed nearly $480,000. What does this
    show about the ability of the IRS to impartially review the
    President's tax returns?
        Mr. YIN. Congresswoman DelBene, I can't comment on the
    impartiality. I think it is suggestive that there was a
    problem. Whether it is simply incompetence or partiality, I
    don't know.
        In fact, what happened in that instance is, after the
    Congress--the Joint Committee did its determination, the IRS
    went back and actually audited again and essentially confirmed
    the Joint Committee's determination and reversed its own first
    determination. So there was obviously a problem with the first
    audit, but I can't tell you whether it was out of a feeling of
    partiality or whether there was undue influence or simply some
    people weren't doing the job they were supposed to be doing.
        Ms. DELBENE. But by allowing others to review those
    documents, we were able to find out that they were not actually
    correct.
        Mr. YIN. Well, I think it certainly raises an issue that
    might be worthy of the Committee's concern, which is that if a
    very high-ranking official is being audited, whether it is the
    President or the Treasury Secretary or somebody of that nature
    who has a supervisory role over the auditors, it seems to me
    that it might be a good policy for the Committee to double
    check that type of situation.
        Ms. DELBENE. Thank you.
        Dr. Thorndike, given the current pressures on the IRS and
    what happened with Nixon, should the IRS requirement to audit
    tax returns of Presidents and vice presidents be codified?
        Mr. THORNDIKE. As with the disclosure requirements, I think
    that these would be better off codified than handled through
    the internal policies of the IRS. And to just--I just wanted to
    add that, during that Nixon episode, there was very real debate
    and real concern about the sufficiency of an IRS audit. And
    there were calls for outside auditors. Or what that even meant,
    they weren't sure. And eventually their answer was the joint
    committee could be that outside auditor. But there was real
    concern that the IRS had missed this the first time through.
    Part of the explanation is that they actually had a change of
    commissioner in the middle of that, and the new commissioner, I
    think, took a much more vigorous approach to this.
        But I think it is quite reasonable for people now to worry
    based on the actual experience in the Nixon Administration that
    the IRS may not be able to really vigorously enforce the law
    relative to the President. I think they try very hard. I don't
    mean to slander the IRS. I see this as a structural problem,
    not as a criticism of the IRS itself.
        Ms. DELBENE. Thank you.
        Professor Yin, I will go back to you. The Committee must
    make a written request to receive a return. Is there any
    limitation on what returns or return information can be
    requested?
        Mr. YIN. No, there is no limitation. The Committee can ask
    for anything it wants. I think good practice would suggest that
    the Committee be somewhat targeted in its request simply
    because it would take a lot of time if the requests were very
    broad.
        Ms. DELBENE. Thank you. Thanks to all of you.
        And I yield back, Mr. Chairman.
        Chairman LEWIS. The chair now recognizes for 5 minutes Ms.
    Sanchez.
        Ms. SANCHEZ. Thank you, Mr. Chairman. And to our witnesses,
    your testimony has informative as we work through this very
    important issue, so I want to thank you, first and foremost,
    for being with us.
        I think it is long past time for this Committee to do its
    constitutional duty and operate as a coequal branch of
    government. And I can say that I have been proud to be part of
    the Committee and House floor efforts to properly exercise our
    authority. Because as Members of Congress, we take an oath to
    uphold and defend the Constitution. And when we swear that
    oath, we recognize our responsibility and our duty to uphold
    the integrity of this institution. Holding the executive branch
    accountable is a bear minimum step, I think, in fulfilling that
    constitutional duty.
        To me, here the facts are pretty simple. The American
    people deserve a full picture of potential conflicts of
    interest for those who have the privilege of holding the
    highest elected offices in our country or those who aspire to
    hold them.
        Transparency is a pretty good thing. The American people
    have the right to know the financial interests of those that
    are crafting policy that affect them. And hearings like this
    and passage of legislation like H.R. 1 will move our country
    forward, not backward, in the issue of transparency.
        Since this Administration began, we have seen countless
    examples of why this information should have been disclosed,
    like in every other Presidential candidate in modern history
    has done before for the last several decades.
        From tax reform to dealing with foreign entities and
    individuals, the American people deserve to know exactly
    whether their executive stands to personally benefit or be
    unduly influenced. The personal business endeavors of the
    leader of the free world should be held to very high standards
    indeed.
        Dr. Thorndike, you previously mentioned that you would like
    to see the release of tax returns codified. Are you worried
    that this tradition, because it is just a tradition right now,
    is being eroded?
        Mr. THORNDIKE. I am concerned that it may, in fact, be
    completely broken. And I think that we can't count on
    traditions.
        Again, if we believe that this sort of transparency is
    important, and I do, then we can't really depend on a tradition
    to get the job done. And, I mean, just as an example of that,
    let's think about the--maybe the most hallowed tradition in
    American politics, which was the two-term Presidency which was
    revered by everyone until it wasn't. And when Franklin
    Roosevelt broke that tradition, Congress responded by actually
    making it a law--or the Nation responded by making it a part of
    the Constitution.
        I think if things are important enough, and I believe that
    transparency is one of those things, we should, in fact,
    require them legally, rather than just hectoring people to try
    to get them to do what we want them to do.
        Ms. SANCHEZ. I happen to agree.
        And, Mr. Thorndike, if Presidential hopefuls' tax returns
    are released, they are redacted so that sensitive information
    like Social Security numbers and other important information is
    not released to the public. Is that correct?
        Mr. THORNDIKE. Yes. Social Security numbers have been
    blacked out for a long time. They were not originally. I think
    this was before the era of rampant identity theft. But they
    have been now, and they are routinely. I mean, Presidents have
    been blacking them out for 40 years.
        Ms. SANCHEZ. Thank you.
        Professor Yin, you just heard Mr. Kies' testimony. Do you
    have any comments with respect to his testimony?
        Mr. YIN. Yes, I do. I think a few words of history would
    help to clarify the misunderstanding that Mr. Kies seems to
    have on this point.
        In 1924, when Congress began thinking about the law that is
    before us today, Secretary Mellon vigorously objected and was
    concerned specifically about the potential disclosure of the
    tax return information to the public. And he urged over on the
    Senate side in a Senate hearing two changes. One is, he said,
    any committee that receives the information must do it in
    closed session. And, second, if any of the information goes to
    the full House or full Senate, it also must be done out of
    public eye with nothing included in the Congressional Record.
        Congress in 1924 agreed with the first step, which is why,
    if you were to seek information today, you would need to do it
    in closed session. But it specifically rejected the second
    step. And the reason was that it was inconsistent with the
    congressional goal in 1924, which was, as a coequal branch of
    government, it wanted to give itself the exact same rights as
    the President. The President at the time had the ability to
    obtain and disclose anybody's tax returns.
        Fast-forward to 50 years later, the same issue arose in
    1976. And what Congress did is they took away the ability of
    nontax committees to make disclosures, but they did not take
    away the tax committee right.
        If I could add one final point, which is that some of you
    may be wondering, well, why does the statute, as Mr. Kies
    suggests, the statute only says you may ``submit'' and not make
    a public disclosure? And although I don't find anything
    specific in the historical record on that point, I think there
    is a very easy explanation. And it goes to the fact that in the
    mid 1920s, party affiliation was not nearly as important as it
    is today. There were a lot of progressive Republicans who
    tended to vote with Democrats on issues like this one, issues
    of disclosure, investigations, and so forth.
        Meanwhile, Congress was controlled by the old guard
    Republicans. The leaders of Congress did not want a single
    committee to make the determination of whether something is
    disclosed to the public or not, because they didn't know what
    the specific makeup of that committee might be. It might have a
    number of progressive Republicans on it who would vote in favor
    of disclosure. They wanted the full House or the full Senate to
    make that determination, and that is why they developed this
    procedure where all the Committee can do is to submit----
        Chairman LEWIS. Thank you, Professor.
        Mr. YIN [continuing]. To the House and Senate.
        Ms. SANCHEZ. Thank you. I am sorry. My time is expired.
        But, Mr. Chairman, I would ask unanimous consent to submit
    a letter from the former acting director of the Office of
    Government Ethics, Don Fox, in support of Title X of H.R. 1.
        Chairman LEWIS. Without objection. Thank you very much.
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

         Ms. SANCHEZ. Thank you, Mr. Chairman.
        Chairman LEWIS. The chair now recognizes for 5 minutes Mr.
    LaHood.
        Mr. LAHOOD. Thank you, Mr. Chairman, I want to thank the
    witnesses for your testimony here today.
        In a prior career, I was honored to serve as a Federal
    prosecutor and a State prosecutor. I appeared before many grand
    juries. Section 6103 under the statute allows the Federal grand
    jury to subpoena tax records.
        I guess as I look at this issue, obviously, it is not a
    surprise to anybody, we have an ongoing independent counsel
    investigation, a grand jury that has been impaneled for over 18
    months. Out of that grand jury investigation have been a number
    of indictments related to tax fraud.
        Clearly under this grand jury, the independent counsel, as
    with others over the last 40 years, there is the broad
    authority to go after tax records, look at criminal violations,
    and look at civil violations. I have no doubt that is ongoing
    today.
        I guess as I look at this, I am a little perplexed and
    confused on why we would give the authority or why we would
    have the chairman of the Ways and Means Committee ask the
    Department of Treasury for the President's tax records.
        As I look at the last 40 years of the independent counsel
    investigation statute, I have been trying to figure out whether
    there has been another example of this. I have not seen any so
    that causes me some real concern.
        I guess, Professor Yin, you are the historian. Can you
    provide the Committee with an example of where the chairman of
    the Ways and Means Committee has asked the executive branch for
    their taxes when there is an ongoing Department of Justice
    independent counsel investigation?
        Mr. YIN. Congressman LaHood, I can't think of an example
    off the top of my head, but I think it is important to
    understand----
        Mr. LAHOOD. Thank you. Reclaiming my time.
        Would it surprise you to learn that one does not exist?
        Mr. YIN. Well, again, I can't think of one off the top of
    my head. The authority itself has been rarely invoked, so----
        Mr. LAHOOD. Thank you.
        Mr. YIN [continuing]. It is clearly just a handful of
    situations.
        Mr. LAHOOD. Thank you.
        Dr. Thorndike, can you provide the Committee with an
    example of where the chairman of the Ways and Means Committee
    has asked for the President's tax records when there is an
    ongoing independent counsel Department of Justice
    investigation?
        Mr. THORNDIKE. No.
        Mr. LAHOOD. Do you have any evidence to support that that
    has been done in the past?
        Mr. THORNDIKE. I am not aware of anyone having requested
    the President's tax returns in the past.
        Mr. LAHOOD. While there is an ongoing independent counsel
    investigation?
        Mr. THORNDIKE. Yeah, I mean--I mean, I--but has there ever
    been any--have they ever requested one?
        Mr. LAHOOD. Again, would it surprise you to learn that that
    in fact has not happened?
        Mr. THORNDIKE. No.
        Mr. LAHOOD. Okay. Mr. Rosenthal, same question to you. Can
    you provide the Committee with an example of when that has
    occurred?
        Mr. ROSENTHAL. I am unaware of a historical record on this
    point.
        Mr. LAHOOD. Thank you.
        Mr. Bookbinder.
        Mr. BOOKBINDER. I guess I would say that I believe the
    Presidents have voluntarily disclosed their tax returns while
    under independent counsel investigation. So I am not sure the
    issue would have come up.
        Mr. LAHOOD. So let me ask you on that point, Whitewater was
    an independent council investigation, correct? During that
    time, do you know if the Ways and Means chairman asked for the
    President's tax records?
        Mr. BOOKBINDER. I don't know, but I believe the President
    voluntarily disclosed them.
        Mr. LAHOOD. So President Clinton voluntarily disclosed
    them. Is that your testimony today?
        Mr. BOOKBINDER. You know, I would really defer to the
    historians, but my sense is that for 40 years, Presidents
    routinely have voluntarily disclosed tax records.
        Mr. LAHOOD. Would you be surprised to learn that the
    chairman of the Ways and Means Committee has never asked for
    that with an ongoing independent counsel investigation?
        Mr. BOOKBINDER. I don't have any reason to think
    differently than the historians on this panel.
        Mr. LAHOOD. Well, thank you for that.
        I guess going back to my original thoughts on this, as I
    look at it, we have had approximately 30 independent
    investigations by DOJ. The broad authority that they have, like
    this independent counsel has, is real. So to think that this
    Committee would want to be engaged in asking the Department of
    Treasury for the President's tax records again is confusing to
    me. It has never been done. And as I look at what this
    Committee should be based on, this seems to me like a waste of
    time of resources and energy here.
        As we talked, Professor Yin, you did a great job talking
    about the legitimate purpose for why this should be used. I
    look at the legitimate purpose and the legal purpose on this
    and I do not see it. I go back to what a number of my
    colleagues said on weaponizing the Tax Code and setting a
    precedent that has never been done. We should all be concerned
    about that.
        Thank you. I yield back.
        Chairman. LEWIS. The chair now recognizes for 5 minutes Mr.
    Suozzi.
        Mr. SUOZZI. Thank you, Mr. Chairman. Thank you so much for
    conducting this hearing. And thank you to the witnesses for
    your time and for your expert opinions.
        Dr. Thorndike, I was going to ask this question, but just
    in response to my friend Mr. LaHood's questions, did President
    Clinton voluntarily disclose his tax returns?
        Mr. THORNDIKE. Yes, every year that he was in office and
    while running.
        Mr. SUOZZI. So there would be no need for the chairman of
    Ways and Means to ask for his tax returns despite the fact
    there was an investigation going on because they were disclosed
    publicly?
        Mr. THORNDIKE. Yeah. I mean, more generally, there would
    have been no need to request any President's tax returns in the
    last 40 years because they have all been a matter of public
    record.
        Mr. SUOZZI. Okay. I really want to focus on H.R. 1 and the
    conflict of interest questions. That is the thing that I am
    most concerned about. We have a duty here to try and protect
    the American people and to make sure that we are doing our
    jobs. This can't be a partisan thing; it has got to be
    something we are doing to follow our duties under the
    Constitution to make sure that the public has the information
    that they need.
        Mr. Thorndike, you told me earlier that your doctorate is
    in history of 20th century politics in America. So what would
    be examples of conflicts of interest that someone might have
    had throughout history or maybe something that was uncovered in
    some of these disclosures that have taken place? Or if you
    can't think of a specific instance of something that has been
    discovered, what would you speculate could be a potential type
    of conflict? Give us, like, real type of examples.
        Mr. THORNDIKE. Well, I mean, I am not aware of there ever
    being any discovery of financial conflicts of interest
    involving an American President. They may have been there and
    not revealed. Most Presidents have put their assets in blind
    trusts, so it is not clear whether or not the President would
    even be aware of what those conflicts might be.
        I mean, you know, one could imagine that any piece of
    legislation, if it is going to change the Tax Code in a way
    that benefits the President, might be of relevance to the
    President. Is that a conflict of interest? I mean, that is hard
    to know.
        Mr. SUOZZI. Well, it is really the appearance of a conflict
    of interest is what we are most concerned about, isn't it?
        Mr. THORNDIKE. Yes.
        Mr. SUOZZI. For example, President Johnson had a lot of
    business interest, for example. Would there be potential
    conflicts of interest based upon your knowledge of his history?
        Mr. THORNDIKE. I would imagine so. I mean, this was before
    Presidents with releasing their tax returns, so we wouldn't
    know exactly what they are.
        Mr. SUOZZI. So, Mr. Bookbinder, you talked about different
    types of conflict of interest that could potentially exist.
    What are the ones that you are concerned about most?
        Mr. BOOKBINDER. Well, I would just first of all say that a
    part of the reason why it is hard to find a historical example
    is because no President has retained massive global business
    interests the way that President Trump has previously. So we
    are really in unchartered territory here. But I would be very
    interested in the most basic conflicts kinds of questions in
    terms of how would the President's own tax interests be
    affected by the changes to the tax law he has made.
        And then we have also seen that this President has had
    extensive business dealings with foreign interests. That is
    something we could learn more about from--potentially from tax
    returns. That could be incredibly----
        Mr. SUOZZI. How would we find them in a tax return, you
    know, if it is his individual tax returns? Would the individual
    tax returns be sufficient or would you need to see his business
    tax returns as well?
        Mr. BOOKBINDER. I mean, of course it is hard to know
    exactly what would be in his tax returns. It may well be that
    if he is receiving foreign income, that he would be disclosing
    that. But certainly with the kinds of very complex business
    interests with literally over 500 different interrelated
    companies that this President has, it points out the importance
    of getting those business tax returns, which are going to give
    a lot more--potentially a lot more information about where the
    money is coming from and what----
        Mr. SUOZZI. So it doesn't have to be specific to President
    Trump, but could you give an example of a foreign interest in a
    business that would be a conflict for a chief executive?
        Mr. BOOKBINDER. I mean, certainly--really almost--for
    instance, if there were--if a President had an LLC or some
    other kind of company which had a foreign--which had a partner
    that was a foreign company, potentially----
        Mr. SUOZZI. So an investor could be someone from a foreign
    country that you could have undue influence?
        Mr. BOOKBINDER. Exactly.
        Mr. SUOZZI. What would be a type of businesses that a
    President could have an interest in that, if money was brought
    in through that business, would potentially impact the
    President's decision or vice president?
        Mr. BOOKBINDER. Well, for instance, a lot of foreign
    governments have very extensive funds that invest in
    businesses. And so if there was a sovereign fund that was
    putting money into, say, a construction project, if there was a
    Saudi fund or a UAE fund, that could affect the way the
    President looks at any decision that involves that country,
    conceivably.
        Mr. SUOZZI. Okay. My time is about to expire.
        I yield back, Mr. Chairman. Thank you.
        Chairman. LEWIS. Thank you very much.
        Now that you are recognized for 5 minutes, Ms. Chu.
        Ms. CHU. Mr. Yin, I understand that the chair of Ways and
    Means has the authority to ask for the President's tax returns.
    Then Ways and Means can vote to submit it to the House, and
    then the House can vote to make the returns public. Mr. Kies
    made a startling assertion when he said that if the Committee
    votes to release any tax return information to the full House,
    it would risk a criminal violation. In fact, he talked about a
    felony that would be worth 5 years in prison. Based on your
    expertise, do you agree with his interpretation?
        And I would like to also ask, do we indeed have the legal
    authority to obtain these tax returns and to submit it to the
    House to make it public? And why is it that we have had this
    authority for 100 years?
        Mr. YIN. Thank you, Congresswoman Chu. I don't agree with
    his view. I think that the historical record is very clear as
    to what the intention of Congress was in creating this
    authority for the tax committees, and it was to allow the
    potential of a public disclosure. I think that to think
    otherwise right now would require us to believe that Congress
    forfeited its ability to exercise its informing function with
    respect to tax return information. That is, nobody could ever
    inform the public about any matter of importance to the
    government if it involved the disclosure of tax return
    information without suffering a criminal penalty. I don't
    believe that is the case. That would be an inconceivable
    outcome, in my view.
        And I would further add that in the few instances where
    this authority has been used, in every single instance, there
    has been a public disclosure at the end of that exercise of the
    authority. And I just commend to you the floor statement of
    former Ways and Means chairman, Wilbur Mills, in 1974 when he
    submitted the Nixon report to the House and he explained in
    just a few paragraphs exactly his understanding of what he was
    doing and why he was doing it. And it is exactly consistent
    with the idea that he was doing it so that the report could
    become public.
        Ms. CHU. Mr. Bookbinder, some opponents of requiring the
    disclosure of Presidential tax returns as written in H.R. 1
    argue that candidates are already required to file a financial
    disclosure form or OGE Form 287e. Can you explain the primary
    differences between the information found on the disclosure
    form and the information found on a tax return and why it would
    be critical, in fact, to have a tax return involve a financial
    disclosure?
        Mr. BOOKBINDER. Sure. There are a number of differences.
    One of the most stark ones is that, for instance, for income on
    a financial disclosure, any income over $5 million is simply a
    box that says over $5 million. So somebody could be making $6
    million or $600 million and we wouldn't know the difference
    looking at their financial disclosure form. Obviously, a tax
    return is going to be much more precise. There are a lot of
    areas from loans to investment partners where we are likely to
    get very different information from the tax returns than we get
    from the personal financial disclosure form.
        Ms. CHU. How about the issue of whether the candidate has
    paid taxes or has avoided taxes?
        Mr. BOOKBINDER. Absolutely. And the personal financial
    disclosures are not going to provide any information about what
    taxes somebody paid, they are not going to give any information
    about charitable giving. And those are things that are
    potentially very important for the American public in
    evaluating a candidate and evaluating a President.
        Ms. CHU. And, Mr. Rosenthal, you said--you discussed when
    it would be appropriate to submit a request under Section 6103,
    for instance, when there has been a refusal by the office
    holder to divest financial interests in a large empire or a
    refusal to transfer their interests in a blind trust. Why is it
    important for Congress to obtain the office holder's tax
    returns and other tax information?
        Mr. ROSENTHAL. Well, in my written testimony, I described
    the unusual circumstances in which the Committee might seek
    information from tax returns, one of which being if the
    President has not divested his financial interests in a
    sprawling business or transferred to a blind trust. In that
    circumstance, the possibility of the President having income
    from many different sources is pretty likely. And so to see
    those partnership returns and the business returns could be
    pretty important. I would point out, as Congressman Suozzi was
    asking the other witness here about partnership returns, I
    could tell you line 16 of the partnership return asks: ``does
    the partnership have any foreign partners.'' Line 20 of the
    partnership return asks: ``enter number of partners that are
    foreign governments.''
        And so when there is a sprawling global economic empire
    that is comprised of LLCs and partnerships around the world,
    there are just a lot of questions to be asked. The 1040 is
    merely the collector of composite information without
    disclosing the kinds of detail you might like to have.
        Mr. SUOZZI. Mr. Chairman, let the record reflect that my
    name is Suozzi, not Suozzi.
        Mr. ROSENTHAL. I apologize.
        Ms. CHU. I yield back.
        Chairman. LEWIS. Thank you.
        The chair now recognizes for 5 minutes Dr. Wenstrup.
        Mr. WENSTRUP. Thank you, Mr. Chairman. I appreciate that.
        Let me start with you, Mr. Kies. What is the purpose of the
    IRS?
        Mr. KIES. To collect the revenue to fund the Federal
    Government.
        Mr. WENSTRUP. What is the purpose of an audit conducted by
    the IRS?
        Mr. KIES. To hopefully make sure that people, when they are
    voluntarily complying, are actually--are complying with the
    statues of which are, in some cases, quite complex, but that is
    the purpose of audits.
        Mr. WENSTRUP. And the President and vice president get
    audited every year?
        Mr. KIES. Correct, according to law now.
        Mr. WENSTRUP. Okay. So, Mr. Pascrell, you said something
    before that really hit home. You said no one is above the law,
    and I agree with you 100 percent.
        Is it the law that the President or vice president bring
    forward their tax returns to the American people?
        Mr. KIES. Is it the law that what?
        Mr. WENSTRUP. Is it a law that the President or vice
    president bring their tax returns forward to the American
    people?
        Mr. KIES. As I think we have confirmed----
        Mr. WENSTRUP. We have seen testimony on that. That is not
    the law.
        Mr. KIES. That is correct.
        Mr. WENSTRUP. And no one is above the law. But at the same
    time, no one should be forced to violate a law that maintains
    their privacy. You know, as a doctor, I think about what we go
    through to make sure we understand HIPAA and the privacy of our
    patients and how important that is. And is there for a reason.
    That privacy is there for a reason for patients to be protected
    from disclosure their private information and especially about
    their healthcare or other personal information. Why is that? In
    part, because people can take something from their health
    record and possibly use it for nefarious means or for political
    purposes, if they so choose. That is the purpose of that,
    whether it is an innocent part of your healthcare record or
    not.
        So I kind of look at this the same way. I also want to
    bring up, maybe any of you can tell me, and I know in the past,
    some Presidents have put forth their health record, and given
    the results of their entire physical. Is that true? Can anyone
    attest to that? I know you are mostly tax experts, but is that
    true?
        Mr. KIES. And some have not.
        Mr. WENSTRUP. And that should be their choice. That should
    be their privacy. We have the checks and balances in place. We
    have the audits in place. But people, every American, deserves
    their privacy. I compare the two. Let's take an example. And I
    was not around to necessarily know, but America did not know
    that President Roosevelt could not stand. My guess is maybe he
    wanted to keep that private so it wasn't used against him for
    nefarious purposes.
        I think of the privacy of American citizens at every level,
    whether it is their healthcare or their tax returns. There are
    other checks and balances in place for the President and vice
    president, and they have their rights, just like each and every
    one of us.
        With that, I would like to yield the balance of my time to
    Mr. Kelly.
        Mr. KELLY. Thank you, Doctor.
        Just while you are all there, I am trying to understand
    this, is there anybody that doubts that the President or the
    vice president's tax returns are not being audited by the IRS?
        Mr. PASCRELL. Right here.
        Mr. KELLY. Doctor. Dr. Thorndike.
        Mr. THORNDIKE. I don't doubt that they are being audited.
        Mr. KELLY. Professor Yin.
        Mr. YIN. I really don't have any knowledge on that.
        Mr. KELLY. Oh, yes, but you do. You are the historian. Are
    you are telling me that you don't know that the President and
    the vice president's taxes are being audited?
        Mr. YIN. I know what is in the IRM, but I don't know
    whether in fact that is being carried out. I have no knowledge
    of that.
        Mr. KELLY. Okay.
        Mr. Rosenthal.
        Mr. ROSENTHAL. Like Professor Yin, I have read the Internal
    Revenue Manual which calls for----
        Mr. KELLY. So the fact that we all know that they get
    audited to the fact that you weren't there to see the audit,
    makes you wonder if it actually is being done?
        Mr. ROSENTHAL. Whether the President is being audited or
    not is tax return information and cannot be disclosed, and so
    to ask----
        Mr. KELLY. Not until we had this meeting tonight.
        Mr. ROSENTHAL. Not until a law were passed.
        Mr. KELLY. Okay. I get it. I get it.
        Mr. Bookbinder.
        Mr. BOOKBINDER. No, the same. We certainly don't know what
    manner of audit was done, assuming it was done.
        Mr. KELLY. Okay.
        Mr. Kies.
        Mr. KIES. I think it is highly unlikely that the IRS is not
    auditing the President and vice president, given what their own
    Internal Revenue Manual says. I find that inconceivable.
        Mr. KELLY. I think we all know that, especially if I was a
    historian that studied this, I would have pretty good idea of
    what is taking place.
        So the only difference tonight is we are talking about the
    ability to make this President, this duly-elected President's
    tax returns public.
        Thank you. I yield back.
        Chairman. LEWIS. The chair now is pleased to recognize for
    5 minutes Ms. Moore.
        Ms. MOORE. Thank you so much, Mr. Chairman. And I am,
    again, so pleased to be a Member of this Subcommittee and
    appreciate the witnesses for their patience today.
        I just came off of the Financial Services Committee to--on
    this body, and one of the things that we were looking at was
    the unusual lending pattern of Deutsche Bank to the President
    of the United States. Deutsche Bank had a subsidiary called
    VTB--I can't say the Russian name, so VTB. And at some point--I
    am just giving you background for my question--Donald Trump had
    borrowed $600 million and owed another $300 million, and they
    had called for a $40 million payment and he said, as a result
    of an act of God, the financial meltdown in 2007, 2008, that he
    shouldn't have to pay it back. He was in court in New York.
    Didn't want to pay Deutsche Bank back. Suddenly, he left the
    commercial real estate division of Deutsche Bank and went to
    the private wealth fund, VTB Bank, a bank that certainly had
    many Russian oligarchs who invested in that. Suddenly, his debt
    was paid off and they offered him an additional $25 million.
        VTB Bank also is associated with this spy that was just--
    the sanctions removed and so on and so forth. So other banks
    couldn't believe it, they said are you F'ing, kidding when
    Donald Trump was given this loan by Deutsche Bank.
        So we have a letter here from our distinguished Ranking
    Member saying if there are valid concerns with financial
    disclosures, then let's come together to legislate a thoughtful
    solution to require additional disclosures. And this has been
    quoted a lot by Members here. And so I am wondering, will--he
    goes on to say that we ought to improve our ethics laws. Are
    there any ethics laws or any audits that will help us get to
    this unusual lending activity under Deutsche Bank that any of
    you on the panel can think of? Dr. Thorndike, Dr. Yin, Mr.
    Bookbinder.
        If we want to look at the business transactions, the line,
    line--did you say line 40 on the 1040, that is going to give us
    the information that we need regarding these business
    partnerships, relationships, and loans.
        Yes, sir.
        Mr. YIN. Just a quick comment. I think that tax return
    information may provide useful leads for additional inquiries
    along the lines that you are describing. I am not suggesting
    that the tax return information in and of itself would find
    some smoking gun that would satisfy your inquiry. But there may
    well be useful leads that you could pick up from the tax return
    information that, with additional inquiries----
        Ms. MOORE. Do you think IRS audits would give us that lead,
    or voluntary disclosures of just the front page of the 1040
    versus the attachments?
        Mr. YIN. No. I am sorry, Congresswoman Moore. I am talking
    about if the Committee were to seek information, they would
    then have whatever return information that they sought. And
    from that information, that there may well be helpful leads
    along the lines of your inquiry.
        Ms. MOORE. Do any of you--Mr. Bookbinder, the distinguished
    Ranking Member said that we ought to strengthen our ethic laws.
    What ethic laws is he referring to that we could strengthen in
    order to clear up this mystery about Deutsche Bank's
    relationship with Trump and the Trump organizations? By the
    way, Trump Tower was supposed to be built by VTB, the
    subsidiary of Deutsche Bank. Can you just tell us what ethic
    laws we could strengthen that would give us this information
    versus these tax returns?
        Mr. BOOKBINDER. Well, I do certainly think there is room to
    make the financial disclosure forms more rigorous than they
    currently are. I also think, especially with a President and a
    vice president where conflicts of interest are so important,
    you really need all the information you can get. And tax
    returns are going to provide more information on this kind of
    question than probably you would ever be able to get in a
    financial disclosure form that all government--all senior
    government officials have to fill out.
        Ms. MOORE. And just reclaiming my last 10 seconds. You
    know, I just would appeal to my colleagues to not accuse us of
    lazy legislating to ask for these tax returns when we have such
    a conflicted President.
        And with that, I yield back.
        Chairman. LEWIS. The chair now recognizes for 5 minutes Mr.
    Boyle.
        Mr. BOYLE. Thank you, Mr. Chairman and Mr. Ranking Member,
    and I thank the witnesses.
        Under the Constitution and our system of checks and
    balances, Congress has not just the right, but the
    responsibility to oversee whether our laws are faithfully
    executed by the executive branch. In accordance with this duty,
    almost a century ago, Congress explicitly enumerated this
    Committee's right to review any return or return information in
    the aftermath of two crises of public trust; two scandals,
    incidentally, which have remarkable parallels to the present
    day and this President.
        One was the Teapot Dome scandal where senior officials in
    the Harding Administration granted public oil field leases in
    exchange for bribes. And the other involved, as was previously
    referenced, Treasury Secretary Andrew Mellon, who continued to
    own many business interests while serving in government. Sounds
    familiar. Some believe the Bureau of Internal Revenue, as it
    was then called, gave him and his businesses preferential
    treatment.
        So, again, the parallels between the scandals of a century
    ago that gave birth to this 1924 law and the present day are
    really remarkable. For example, President Trump maintains a
    sprawling business empire, which he refuses to transfer to a
    blind trust. According to multiple published reports, the
    President, through his businesses, derives income from foreign
    governments and their lobbyists, which also may violate the
    Constitution's prohibition against emoluments.
        The President reportedly intervened personally to block the
    FBI from moving its headquarters, and thus, opening up for
    commercial development a site just a few blocks from his
    downtown Washington hotel. The President reportedly paid little
    or no tax for many years, in part because of aggressive tax
    planning and in part, perhaps, tax evasion.
        Finally, his foundation and inaugural committee are
    currently under criminal investigation.
        So I would open it up really to any one of you to comment
    on what I have had to say about the historical precedent that
    gave birth to this important law and the current facts as we
    know them. Professor Yin and then Mr. Rosenthal.
        Mr. YIN. I would just say briefly that I completely agree
    with your point of the parallels of what happened almost 100
    years ago that caused this law to be developed and the current
    time. I think the parallels really are very close.
        Mr. ROSENTHAL. Congressman, I would just add that the use
    of 6103(f) authority is use designed to further a legislative
    purpose, the checks and balance of our constitutional system. I
    do not believe the use by this Committee to try to reaudit the
    President is what this Committee would be pursuing. Of course,
    it is your purposes and goals that would need to be achieved.
    However, the conflicts that we are discussing, the conflicts
    with respect to the execution of the Office of the President,
    the conflicts with respect to whether audits are being run
    correctly, the conflicts with respect to whether or not the
    President is running the country for his benefit or for ours,
    those are all conflicts that are within the purview of the
    legislative branch to determine with respect to the executive
    branch.
        Remember, in my view, the legislative branch oversees the
    executive branch, not the other way around, and we have one
    President who runs it.
        Mr. BOYLE. Well, it is not just your view, it is also
    explicit in the United States Constitution, so I obviously
    agree.
        Mr. KIES. Can I----
        Mr. BOYLE. One final kind of specific in-the-weeds point on
    this. The distinction between personal returns and business
    returns. In your view, would also looking at the business
    returns be necessary in order to address some of the questions
    that we have?
        Mr. ROSENTHAL. So, yes. Let me quote the current IRS
    commissioner who during the campaign said: To fully understand
    the financial status of Trump, one would need to see his
    returns from multiple years, the work papers for the individual
    returns, and the returns for numerous related entities.
        If you look to the President's own lawyers who wrote a
    letter describing whether his tax returns reflected Russian
    entanglements, they said that, and they looked at the 500,
    business entities that were listed on President Trump's
    financials and are linked and the income flows through to his
    returns, I don't think there is any question, but if you want
    answer some of the questions that have been raised at this
    hearing, you would have to have business returns.
        Mr. BOYLE. Thank you. I am out of time. I yield back.
        Chairman. LEWIS. Thank you so much. I thank all of the
    Members for your participation.
        The chair now recognizes for 5 minutes Mr. Arrington.
        Mr. ARRINGTON. Thank you, Mr. Chairman. And Mr. Kies--and
    thank you, witnesses.
        Mr. Kies, you look like you might want to comment on that
    last question and dialogue.
        Mr. KIES. Well, the only comment I was going to point out
    is that there clearly are ways in which the financial
    disclosure rules could be modified to make them much more
    useful and much more informative without getting tax returns.
    But this issue of whether or not the current statute is a
    consequence of what happened back in the 1920s I think is
    misguided. It is more a function of what happened in the 1970s.
    In fact, when Congress rewrote Section 6103 in 1976, it was
    because they were concerned that Richard Nixon and his White
    House were handing out tax return information all over the
    place. And that is why Congress, this Committee, wrote as tight
    a provision as Section 6103 as it exists today.
        And contrary to what my friend George Yin suggested as my
    misunderstanding, I don't have a misunderstanding of the
    statute. I encourage all the Members of the Committee to
    actually read the statute. It is unequivocal in terms of what
    it says.
        Mr. ARRINGTON. Are you trying to tell me that in the 1970s,
    there were actually petty, self-serving, politically motivated
    people in this line of business?
        Mr. KIES. It is hard to believe, but yes. That is correct.
        Mr. ARRINGTON. And that is why we tightened up the
    restrictions, so that we wouldn't open up people's tax returns
    to political abuse of power?
        Mr. KIES. The difference between the 1976 rules, which is
    basically what we have today, versus pre-1976 was fundamental.
    It referred to tax returns prior to 1976 as public property,
    public information. The 1976 act, which basically is what we
    have today, tightened those rules down immeasurably, and it is
    reflected in 6103(a), which is the only provision of Section
    6103 that contains a substantive penalty for failure to comply
    with it. The rest of 6103 is a bunch of procedural rules.
        And with all due respect to my friend George Yin, he is
    looking at 1920s legislative history to try and inform us as to
    what this provision means today. I strongly encourage every
    Member of the Committee to actually read the statute.
        Mr. ARRINGTON. Mr. Kies, I am surprised that with a panel
    of experts, tax experts, experts on this issue, that when asked
    if they believed that the IRS was fulfilling its duty to
    execute on mandatory annual audits for the President, that
    there was great uncertainty. It seems like we have a very
    distrustful panel, but I would give them the opportunity again
    if they believe in fact that those mandatory audits are going
    on.
        But before that, if they are going on--and I am going to
    assume that the IRS is doing its job in auditing this
    President--would the issues like effective tax rates and
    whether the President is paying his taxes or if he is evading
    them or sources of income loss and deduction, those things that
    Mr. Rosenthal mentioned, would those not be discovered in an
    audit? If there were problems with that, would those not be
    flags, red flags that would come up in such an audit? Yes or
    no.
        Mr. KIES. Certainly, all of those things would be
    information which the IRS could get. And I guess I would say in
    response to the issue of whether or not people believe that the
    President and vice president are being adequately audited, I
    will say, for me personally, and I would speak for everybody in
    this room, I don't think you want to have done to you what
    probably is being done in the form of the audits to the
    President and vice president. I suspect they are pretty
    intense.
        Mr. ARRINGTON. So nobody up here is against improving
    transparency and identifying information where it would present
    a better picture of potential conflict of interest? I think of
    financial disclosure forms, ethics forms, there are plenty of
    other ways that we can do this without opening up such abuse
    that occurred in the 1970s. Abuses which then transpired into
    more restrictions to prevent that abuse of power.
        Mr. Rosenthal, do you have confidence in the American
    people's judgment when it comes to this issue of disclosure of
    people's tax returns, the President's in particular?
        Mr. ROSENTHAL. Well, I have seen polls----
        Mr. ARRINGTON. Do you trust the judgment on this issue?
        Mr. ROSENTHAL. I have seen polls that more than 60 percent
    of the American public believe the President should, you know,
    disclose his tax returns. Those have been almost constant since
    the campaign.
        Mr. ARRINGTON. Mr. Rosenthal, did you see the election
    results? Because this was an issue during the Presidential
    election. If I recall, this was an issue in the primary, it was
    an issue in the general when candidate Hillary Clinton
    disclosed her tax returns. So the American people were well
    aware of this. And I have got a whole lot more confidence in
    the American people than they have in this body to conduct
    themselves in an objective and fair manner when it comes to
    these sorts of issues.
        I am very concerned with giving this body politic more
    power to abuse, not only this President, but potentially the
    American people.
        Mr. Chairman, I yield back.
        Mr. ROSENTHAL. I would just say I don't know what to make
    as a matter of policy from the election. The American people
    may have expected the legislative branch to continue to oversee
    vigorously the executive branch and may have expected further
    oversight.
        Chairman. LEWIS. Thank you very much.
        The chair now recognizes for 5 minutes Mr. Gomez.
        Mr. GOMEZ. Mr. Chairman, thank you so much. Thank you for
    having this important hearing.
        I find it interesting on a couple of things. First, on the
    question of is it required by law. It is not required by law
    that a Presidential candidate submit their taxes, to reveal
    them. But as a matter of custom and practice, that is what has
    been done since the early 1970s. And it is oftentimes somebody
    who comes along and rips apart that custom that then the body
    politics, the legislative branch or the public itself has to
    take action to codify that custom and practice. We do that all
    the time here in the House where there was unwritten rules, our
    custom and practice and then somebody breaks them, and then the
    House takes action to codify those. This is just another
    example of taking that step, as part of H.R. 1 to take that
    step to require all Presidential candidates and vice president
    candidates to reveal their tax returns.
        You had a good historical point where I was actually
    thinking the same thing regarding the two term. A lot of things
    over time in our history of government were custom and practice
    and somebody came along and broke it, and then we passed a law
    to fix it. So on that issue, let's set that one aside.
        On the issue of excuses. First, the President when he was a
    candidate said his tax returns were under audit, he couldn't
    return them. Now, the gentlemen on the other side of the aisle
    are saying that it is under investigation by the special
    counsel. Sooner or later, I am going to hear that a dog has
    eaten his tax returns, and I don't know even if this President
    has a dog. So we hear one excuse after excuse. And our
    responsibility is to see if there is a reason to go after, a
    legitimate reason.
        Mr.--just to kind of clarify some of the rule and authority
    of this Committee. Mr. Yin, you mentioned--there was a
    discussion on post-1976 rule. What facts give you the
    understanding that we do have that authority and we continue to
    still have that authority today?
        Mr. YIN. Thank you, Congressman Gomez. I completely agree
    that the 1976 act was designed to strengthen taxpayer privacy.
    That was the overriding goal, without any question. But it
    should be noted that in 1976, Congress specifically took away
    the ability of nontax committees to submit information to the
    House or the Senate and to have a public release of it. They
    amended the statute to say that any submission could only take
    place while the full House and the full Senate are sitting in
    closed executive session.
        Importantly, even though they obviously had the ability to
    put the same condition on the tax committee submission, they
    did not. And my reading of that is that Congress wanted to keep
    at least one vehicle open to preserve its informing function
    relative to tax return information. If it had imposed the same
    restriction on the tax committees, then, in effect, Congress
    would have said nobody ever has an opportunity to inform the
    public if it relates to tax return information. And I find that
    result completely inconceivable.
        And so I believe that the history of this provision, which
    was unchanged in 1976 relating to the tax committees, prevails
    in explaining exactly what the authority of the Committee is.
        Mr. GOMEZ. And just to reiterate, to really kind of focus
    in, why is Congress so committed to retaining that authority?
        Mr. YIN. Well, I think Congressman Boyle said it very
    correctly, which is that one of the principles, if not the most
    important responsibility of Congress, is to make sure that the
    laws are being faithfully executed by the agencies and by the
    high-ranking officials--that serve the country. And so it is
    important then to have the ability to inquire about whether
    those laws are being faithfully executed, and to the extent
    that Congress were to find that there has been a violation, it
    certainly is the congressional responsibility to inform the
    public of that. That seems like a very foundational
    responsibility of Congress.
        Mr. GOMEZ. That is the basis of our government, right?
    Checks and balances. And without that ability to do that, then
    we don't have a check on the executive branch.
        Mr. YIN. Exactly right.
        Mr. GOMEZ. I yield back.
        Chairman. LEWIS. The chair is pleased to recognize Mr.
    Pascrell for 5 minutes. And I apologize for passing you over.
        Mr. PASCRELL. No problem, Mr. Chairman.
        Mr. Chairman, I want to enter into the record the articles
    How a Simple Tax Rule Let Donald Trump Turn $916 Million Loss
    Into a Plus; second, Trump Engaged in Suspect Tax Schemes as He
    Reaped Riches From His Father; number three, Trump Foundation
    Will Dissolve, Accused of ``Shocking Pattern of Illegality.'' I
    didn't mention those articles, now I mention those articles.
    Put them in the record. My request. Thank you.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     Mr. PASCRELL. Mr. Chairman, I can't--I must be--it is going
    to take time for my questions. Thank you. About hypocrisy,
    hypocrisy. So we want to protect the privacy of the President,
    and I would too, but we don't want to follow law. When I said
    no one is above the law, I mean, no one is above the tax law.
    And in this case, the tax law is 6103. It is the law of the
    land. When Democrats and Republicans feasted on scandal and
    bribery. That is the law of the land.
        So he is not above the President of the United States.
    President Trump is not above 6103. And it pertains to everybody
    in the executive branch of government, not just the President.
    Because Secretary Fall, who was the Secretary of the Interior
    at the time, is the one who put this scheme together, and went
    after him back in 1923. Okay. That is what happened.
        So, Mr. Kies, thank you for joining all these great people
    like yourself. I have read your stuff. We don't agree on some
    things and we do agree on some things. What do you know about
    that?
        So, Mr. Kies, do you believe--this is a different part of
    the question. Do you believe Committee Republicans violated the
    law in 2014 when they released taxpayer information, over 50
    taxpayers, and they found nothing? Do you believe they violated
    the law?
        Mr. KIES. Absolutely.
        Mr. PASCRELL. Thank you very much, Mr. Kies. Thank you for
    your honesty. That is what I expected.
        So let me have a question here for Mr. George Yin,
    Professor Yin. Some on this Committee have claimed that
    releasing the tax returns of the President under 6103, that
    authority to be a political abuse of power. By the way, we sent
    numerous letters to Mr. Brady when he was the chairman of the
    Committee saying let's do this together so it is not partisan.
    Bull to what they are saying today.
        Professor Yin, you have written about this Committee's use
    of 6103, this Committee, to obtain and release the tax
    information of more than 50 taxpayers in 2014. That happened
    along partisan lines. Republicans voted to release the
    information, Democrats are opposed. Can you explain your
    thoughts on the Committee's use of 6103 in 2014?
        Mr. YIN. Congressman Pascrell, I would be happy to. In that
    instance, the Committee did release the tax return information
    of, by my count, 51 separate organizations, with almost half of
    them having multiple pieces of tax return information
    disclosed. And I looked very closely at that whole situation.
    Forty-one of the organizations had absolutely nothing to do
    with the specific Committee investigation and allegations
    relating to Lois Lerner and the IRS and the purported
    discrimination by the agency against right-leaning exempt
    organizations. They had absolutely nothing to do with it. And
    so the release of those the information for those 41 seemed to
    me to be a clear violation.
        The other 10 organizations, which were all right-leaning
    exempt organizations, the Committee's allegations with respect
    to them were that they weren't processed quickly enough. The
    allegations did not go to the substance of the actual
    applications themselves. And so it seemed to me that if the
    Committee wanted to publish a letter indicating the objection
    as to how it viewed the IRS and Ms. Lerner's treatment, they
    there was absolutely no reason to name the organizations and to
    reveal any tax return information. They could have made exactly
    the same point as the Treasury Inspector General had made just
    a few months earlier in bringing the matter up to the attention
    of the Committee by referring to 10 right-leaning exempt
    organizations or 10 Tea Party type organizations, or whatever
    name would be appropriate, to provide the general sense without
    necessarily naming and revealing any tax return information. So
    I concluded all 51 disclosures were a violation of the law.
        Mr. PASCRELL. Mr. Chairman, thank you for your courtesies
    and your indulgence. This is a very critical issue for the
    American people who are interested in this subject. We are not
    interested in getting someone; we are interested in following
    the law. Period. That is it. Give us the chance to do that.
    Give us a chance--what am I saying? Give us a chance to follow
    the law, and that is what we are doing, and we will not stop.
    Thank you.
        Chairman. LEWIS. Thank you, Mr. Pascrell.
        The chair is now pleased to recognize Mr. Ferguson, 5
    minutes.
        Mr. FERGUSON. Thank you, Mr. Chairman. And I would like to
    yield as much time as he may consume to my colleague, Mr. Rice.
        Mr. RICE. Mr. Pascrell said that we need to follow the law,
    right? We need to follow the law.
        Mr. Thorndike, can you cite any statutory authority as a
    law that requires the President to disclose his tax returns?
        Mr. KIES. There is no requirement that the President----
        Mr. RICE. Mr. Yin.
        Mr. YIN. Nothing in the law right now.
        Mr. RICE. Okay, thank you.
        Mr. Rosenthal.
        Mr. ROSENTHAL. None to my knowledge.
        Mr. RICE. Mr.--I can't read it. I am sorry.
        Mr. BOOKBINDER. Bookbinder.
        Mr. RICE [continuing]. Bookbinder.
        Mr. BOOKBINDER. No current law, though there is a bill that
    you are discussing----
        Mr. RICE. Mr. Kies, what is the statutory requirement?
        Mr. KIES. There is none.
        Mr. RICE. There is none. So we are following the law. And,
    you know, why would we want the President to be required to
    disclose his tax returns? I mean, it has been real clear from
    the testimony of all of the witnesses here that we want to
    check for conflicts. I mean, really that is the primary reason,
    right? We want to see personal benefit or conflicts. So why
    hadn't we thought about that till now? Oh, wait, we have.
        Doesn't the President have to make disclosures, Mr.
    Thorndike, Dr. Thorndike?
        Mr. THORNDIKE. In what sense, disclosures----
        Mr. RICE. Doesn't he have to make financial disclosures?
        Mr. THORNDIKE. Yes, but that is not--those are not--that is
    not necessarily what we are talking about, I don't think.
        Mr. RICE. Well, I mean, the Ethics in Government Act of
    1978 requires personal financial disclosure forms by the
    President and all Members of Congress as well, right?
        Mr. THORNDIKE. It is true, but if the President----
        Mr. RICE. And it is very detailed about what we have to
    disclose. I mean, we have to disclose--I am a CPA, I am a tax
    lawyer.
        Mr. THORNDIKE. It is true----
        Mr. RICE. We have to disclose a lot more information than
    you have to disclose on a tax return about ownership, about
    percentages, about--you know, in fact, Ms. Moore was asking,
    she would like to know more about the President's loans at
    Deutsche Bank. I just pulled up the President's forms, it is
    108 pages long. The loan to Deutsche Bank is listed right
    there, the rate, when the loan matures, the amount of the loan.
        Could you look at the President's tax return, Mr. Kies, and
    determine what the rate was on his Deutsche Bank loan?
        Mr. KIES. I think it is probably unlikely.
        Mr. RICE. Yeah. And would you even know he borrowed the
    money from Deutsche Bank if you were looking at his tax return?
        Mr. KIES. It is unlikely. Probably the only way you would
    know these things is by, and as has been pointed out by some of
    the other witnesses----
        Mr. RICE. Now, if Congress thought, you know, if the
    government thought that disclosing tax returns should be
    required, Mr. Rosenthal, could we not have required that in the
    ethics acts of 1976?
        Mr. ROSENTHAL. At the time, there were voluntary
    disclosures going on, it may not have been viewed as necessary.
        Mr. RICE. Could we have required that, Mr. Bookbinder? Yes
    or no.
        Mr. BOOKBINDER. Yes.
        Mr. RICE. Yeah, of course we could--but we didn't think it
    was sufficiently important to require it. We don't think it is
    sufficiently important unless it is our political enemy.
        Mr. Pascrell was talking about hypocrisy. I will tell you,
    the Democrats are about anything hypocritical. They love to
    weaponize the IRS, a/k/a Lois Lerner and now going after the
    President's tax returns.
        I think in the STOCK Act, we recently reviewed this ethics
    disclosure, and we tightened it up, what, 2 or 3 years ago. So
    this is something that is not new. This is something that has
    been considered over and over again. It has been tightened more
    and more. And, you know, in our zeal, in the zeal of my friends
    across the aisle to attack this President, to weaponize
    agencies of the Federal Government, including the FBI and the
    DOJ and now the IRS, to pursue him with any means possible, now
    they want to go after his tax returns when it is not required,
    it has never been required. We could have required it any time
    we thought it was appropriate. We could have passed the law.
        There is a prospective bill put out there now that may be
    considered at some point and, hell, maybe it will pass, but
    there is nothing that requires the President to disclose his
    tax returns. To say that the President is not complying with
    the law is an abject falsehood. It is an abject falsehood.
        One more time. Mr. Kies, is the President required to
    disclose his tax returns?
        Mr. KIES. No.
        Mr. RICE. Thank you, Mr. Chairman. I yield back.
        Chairman. LEWIS. The chair is pleased now to recognize the
    gentleman from Texas, Mr. Doggett.
        Mr. DOGGETT. Thank you very much Mr. Chairman.
        We, today, pursue two issues. One is how to address with
    new legislation a situation where a future President might
    decide to reverse himself or herself the way President Trump
    did and not make available tax returns as all recent candidates
    for President have done. And the second is to look at the basis
    and the process under a law that is almost a century old that
    gives the chairman of this Committee the authority to review
    tax returns, and if this Committee so decides, that it is in
    the public interest for this Committee to vote to send that
    information to the House where it can eventually be made a
    matter of public interest.
        I, seeing the President's reversal, his entanglement with
    interest abroad and at home, seeing reports that he and his
    family may have benefited in excess of $1 billion from the tax
    bill that he forced through here without a single person from
    his Administration coming to testify in favor of it or explain
    it, seeing all that, I moved on six different occasions in this
    Committee over the last 2 years to use 6103 to obtain the
    President's tax returns. And each time, there were excuses and
    coverup from our Republican colleagues as they obstructed and
    protected the President.
        Now, the President apparently had enough concern about this
    that he did have a review made of his tax returns. The review
    was made by the President's own lawyers; in fact, from a firm
    that proudly declares that it was the Russia law firm of the
    year that made the review of his returns, noting not only that
    he had personal returns, but more than 500 separate entities,
    entities that stretch from Azerbaijan to Panama. And they gave
    him an all clear, this personal law firm, of that. And I
    suppose that is a kind of review, but it is not one that
    inspires public confidence.
        The Commissioner of the Internal Revenue Service, Charles
    Rettig, before he was appointed, said that, quote: For wealthy
    individuals, individual tax returns sometimes only provide a
    brief financial overview linked to numerous other conclusions
    and entities. To fully understand the financial status of
    Trump, one would likely need to see returns from multiple
    years, the work papers for the individual returns, and the
    returns for numerous related entities.
        Mr. Rosenthal, do you agree with that statement?
        Mr. ROSENTHAL. Yes, I do.
        Mr. DOGGETT. And while having a President with such a
    sprawling business empire may be unprecedented, we know there
    are others. Some have already announced as possibilities as
    independents or Democrats for the 2020 election. Every
    President, vice president, and candidate for the future, I
    think, should be held to the same standard that we would apply
    to President Trump.
        Mr. Bookbinder, do you believe that H.R. 1 should be
    strengthened to include a requirement that all candidates
    disclose their business entities?
        Mr. BOOKBINDER. Yes. I think recent events make clear that
    that is really important.
        Mr. DOGGETT. And, Mr. Rosenthal, might such information
    inform how much weight is given to a given policy of the
    President of the United States?
        Mr. ROSENTHAL. Yes. Those type of disclosures would inform
    Congress' weight and deference to executive action.
        Mr. DOGGETT. We know that the President plays a central
    role in tax policy, that his Office of Management and Budget
    offers a review of tax regulations that he lobbies for and
    influences and signs legislation, that the Treasury Department
    that he appoints plays a big role.
        With these multiple roles that the President plays on tax
    policy, is it essential, Mr. Rosenthal, that we have his
    returns to review the impact on those policies?
        Mr. ROSENTHAL. Yes. I believe the regulatory process and
    the discretion the President has with that process, warrant the
    Congress and this Committee understanding what financial
    interests he might yet have.
        Mr. DOGGETT. Thank you.
        And, Professor Yin, an important point, while our focus in
    this Committee is the tax system and the public confidence in
    that system and whether this President is using his office for
    personal gain, the responsibilities when you talk about the
    legitimate purpose for using 6103, doesn't that extend to many
    other issues, such as his possible violation of the emoluments
    clause, his entanglement with Russians and Saudis and others
    who he may be doing business with or for? Because this
    Committee has a responsibility broader than just its own
    jurisdiction over the tax cut.
        Mr. YIN. Congressman Doggett, I believe you are right, and
    that is simply because Congress right now has delegated,
    exclusively to the tax committees this ability to inform the
    public about tax return information. So I believe that the
    legitimate purpose for the Ways and Means Committee would
    extend to a constitutional responsibility of Congress and not
    be limited to the legislative jurisdiction of the Committee.
        Mr. DOGGETT. And just one final one, Mr. Chairman.
        And, Professor Yin, is it also not true that this
    Committee, should it decide to make these records public, has
    powers that even the special counsel, Mr. Mueller, does not
    have?
        Mr. YIN. Yes. That is a very valid point. And that is,
    again, another issue down the road, which is that the special
    counsel can disclose tax return information only in limited
    circumstances, such as a judicial or administrative proceeding.
    If he were to issue a report, it is not clear whether tax
    return information that might be critical to his conclusion in
    the report could, in fact, be revealed to the public, even
    assuming the Attorney General were to allow the report to be
    revealed at all. So that is another issue.
        Mr. DOGGETT. Thank you, Mr. Chairman. And I just would ask
    unanimous consent to include in the record a--the testimony of
    Public Citizen concerning its support for the disclosure of
    Presidential and vice presidential tax returns, and the
    important report of Americans for Tax Fairness, The Case for
    Congress Obtaining Trump's Tax Returns.
        Chairman. LEWIS. So ordered.
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         Mr. DOGGETT. Thank you for your tolerance.
        Chairman LEWIS. Now it is my pleasure to recognize the
    gentleman from California, Mr. Panetta.
        Mr. PANETTA. Thank you, Mr. Chairman. I appreciate this
    opportunity, and thank you for letting me sit in on this
    hearing. I appreciate that.
        Gentlemen, thank you very much for being here today as well
    as your preparation for your testimony today too.
        As you heard from one of my colleagues, and as you know
    well, there is no law requiring a taxpayer to turn over the tax
    returns to this Committee, correct, Mr. Yin?
        Mr. YIN. You are referring to the President?
        Mr. PANETTA. Yes.
        Mr. YIN. There is no law that requires that, that is
    correct.
        Mr. PANETTA. But there is a law saying that this Committee
    can obtain those tax returns, correct?
        Mr. YIN. That is correct.
        Mr. PANETTA. Okay. And that is 6103, subdivision F,
    subdivision 1, correct?
        Mr. YIN. That is correct.
        Mr. PANETTA. And it actually says that any taxpayer shall
    furnish the tax returns to the Committee, correct?
        Mr. YIN. It says the Treasury Secretary shall furnish the
    requested information to the Committee.
        Mr. PANETTA. Exactly. So that is not a should or a could
    have or a would have. It is a shall. It must if we ask for
    that, correct?
        Mr. YIN. That is correct.
        Mr. PANETTA. Okay. Great.
        And, Mr. Yin, I am going to focus on you. Gentlemen, please
    excuse me, but I am going to focus on Mr. Yin, if that is okay.
        In your testimony, Mr. Yin, you basically talk about--on
    page 2, you talk about--this is your formal written testimony--
    you talk about the situation where there would be a refusal to
    turn over these tax returns in this situation that we have been
    talking about and that most likely you say that it would lead
    to the courts. It would be a potential judicial resolution, as
    you say, correct?
        Mr. YIN. It might. It depends on how the Congress reacts to
    that refusal. Obviously, Congress could simply say, well, okay,
    that is too bad. Or Congress could try to enforce its request,
    and that might end up in court.
        Mr. PANETTA. Understood. And if it went to a court, what is
    your--how do you think these courts would look at that
    situation? What would they use?
        Mr. YIN. Well, again, as I indicated in the testimony, I
    think we are in unchartered territory, because I don't think
    the specific issue has ever arisen before, at least I am not
    familiar with it. But there is a little bit of law about
    enforcing congressional subpoenas, and this would be somewhat
    analogous to that. And the law generally says that Congress
    must act with a legitimate legislative purpose.
        Mr. PANETTA. And in regards to the case law that talks
    about a legitimate purpose, can you go into a little bit more
    detail behind those words?
        Mr. YIN. Yes, I would be happy to. So the foundational case
    was an 1880 case, the Kilbourn v. Thompson case. And that
    involved a situation where Congress was making an investigation
    relating to a bankruptcy. And there was a settlement, and there
    was a particular company that was affected by it. And the
    congressional inquiry essentially went to the nature of that.
        The party that was being subpoenaed refused, and so this
    eventually went to the Supreme Court. And the court found that
    it could not find any legislative purpose for this inquiry. The
    court said there is no legislation envisioned in this conflict
    that has arisen. And, in fact, the court said, we can't even
    imagine how there would be any legislation relating to it. It
    said, essentially, if this is a conflict, it is a conflict for
    the courts. It is a conflict for the judicial branch to
    resolve, not the legislative branch to resolve. And in that
    instance, the court concluded that the legislative inquiry was
    not going to be enforced.
        Mr. PANETTA. Okay.
        Mr. YIN. There are other examples, obviously, I can give
    you.
        Mr. PANETTA. Please, in regards to any that have been
    enforced.
        Mr. YIN. Yes. Certainly. Well, so in 1927, there was
    another Supreme Court court case, the McGrain v. Daugherty
    case. Daugherty, in this particular case, was the brother of
    the former attorney general, Harry Daugherty. Harry Daugherty
    had been one of the principals allegedly involved in some of
    the Teapot Dome matters.
        And in this instance, Congress was seeking testimony and
    documents from the brother of Harry Daugherty to, again,
    complete the investigation of this. And the brother refused. So
    this also went to the Supreme Court. And in that case, the
    court made it very clear that there was an appropriate
    legislative purpose to investigate the possible wrongdoing in
    the executive branch and, therefore, did enforce that request.
        Mr. PANETTA. And these are the types of cases you believe
    that courts will look at for precedence, correct?
        Mr. YIN. Well, again, it is speculation on my part. But it
    would be--I would think, if I were a judge or the clerk for the
    judge, that would be certainly an area that I would direct the
    attention to.
        Mr. PANETTA. Thank you.
        I yield back my time. Thank you again, Mr. Chairman.
        Chairman LEWIS. Thank you.
        The chair now recognizes for 5 minutes Mr. Reed.
        Mr. REED. Thank you, Mr. Chairman.
        This has been a very insightful panel, and I appreciate the
    testimony of the witnesses.
        But as I venture down my questioning, I just want to make
    sure we are clear. I have heard from each one of the witnesses
    that there is a right-to-privacy issue here based on the
    historical review of the documents from each of their
    testimony. Does anyone disagree with the issue or concern that
    is legitimate being raised on the rights of privacy of
    individuals under 6103 or this proposed law, and that we need
    to take that into consideration? Does anyone disagree with
    that? Mr. Yin.
        Mr. KIES. One thing I would say in response to that, and it
    is something that no one on the Committee has asked about yet,
    but I think it is an important piece of information. 6103 has
    never ever been used to request taxpayer information by the
    Ways and Means chairman, the Finance Committee chairman, or the
    chief of staff of the joint committee that has been released
    publicly.
        Professor Yin referred to the Nixon situation. Nixon had
    agreed to let his return.
        When I was chief of staff of the joint committee in 1985,
    we requested individual income tax returns in connection with
    our study of why wealthy Americans were giving up their
    citizenship. That return information was never released to the
    public.
        So we can debate whether or not the authority exists, but
    what is not in debate is it will be unprecedented if that
    authority is used to release taxpayer information.
        Mr. REED. And, Mr. Yin, so do you disagree that there is
    no----
        Mr. YIN. Yes, I--so I disagree with that response----
        Mr. REED. No, not with--I have limited time.
        Are you concerned about the right of privacy that is being
    raised here? Do you think there is no right of privacy to
    anyone?
        Mr. YIN. Yes. I believe there is a balancing between the
    right of privacy of individuals and the right of the public to
    know. And it is up to the Congress to determine how to strike
    that proper balance.
        Mr. REED. How to strike that, right? And that is exactly
    what we are wrestling with.
        So the issue I have, because when I heard you testify to, I
    think it was John Kerry's wife, Geraldine Ferraro's husband who
    was concerned about their privacy, they didn't run for public
    office, right? They didn't venture down this public domain path
    that their husbands or spouses did, wives did.
        So the question I have for you is that if you get a
    Presidential return that shows the President having a
    relationship with Mrs. Jones down the street, Mrs. Jones'
    privacy right needs to be respected, correct? She has a privacy
    right, that her information that because she happened to do
    business with an individual who happens to run for President,
    unbeknownst to her, 10, 20, 30 years, 10 years down the road, 5
    years down the road, her right needs to be respected in this
    conversation, correct?
        Does anybody disagree with that?
        Mr. ROSENTHAL. I agree. Yes, her rights should be
    respected.
        Mr. REED. Yes. So the issue that I am wrestling with here
    is, is there a better way to do this? Because, Mr. Bookbinder,
    you are very familiar with our financial disclosure statements.
    You offered testimony that said, you know, what we can't find
    from this financial disclosure, if it is a $6 million deal or a
    $600 million deal, that is potentially a conflict of interest.
    But isn't that irrelevant?
        The fact on the financial disclosure, it discloses the
    relationship upon which the conflict arises. So if the
    financial disclosure shows that, regardless if it is a dollar
    or a trillion dollars, it is still a conflict that can be
    investigated, and that information is out there. Isn't that
    correct?
        Mr. BOOKBINDER. I think that is correct. But there are
    likely to be relationships that are going to be shown in the
    tax returns that are not shown in the financial disclosures.
    And certainly, when--privacy is incredibly important. But when
    somebody chooses to run for President, they give up lots of
    pieces of their right to privacy.
        Mr. REED. So, Mr. Bookbinder, you just teed up exactly what
    I think may be a wiser course for this Committee to pursue, is
    if there is a concern about the financial disclosure and the
    information that that President or that vice presidential
    candidate, or any candidate who runs, if that individual
    chooses to do that, isn't that the more appropriate vehicle for
    us to be considering legislation to say, look, if you are
    running for President, we want your own form under the
    financial disclosure information, we want you to fill out all
    of these issues? Rather than run the risk of some Mrs. Jones'
    privacy being violated because someone wants to get a tax
    return.
        I don't challenge Mr. Neal's integrity in regards to his
    authority to use 6103. He is a gentleman. I respect him. But I
    am concerned about the next Ways and Means chairman or the next
    political battle that is--chooses to utilize this weapon that
    could potentially be abused by a future chairman or any
    chairman.
        So shouldn't we focus our time on what actually could
    potentially bring Members like me from the other side to say
    let's amend the financial disclosure reforms, target the
    information to that form for that individual, and at the same
    time we respect the privacy of individuals that had nothing to
    do with running for President or vice president?
        I will let you ponder that.
        And with that, I yield back.
        Chairman LEWIS. The chair now recognizes for 5 minutes Mr.
    Kelly.
        Mr. KELLY. Thank you, Chairman. And, again, thanks for
    holding the hearing. All the panelists, thanks for coming in
    today.
        I want to go back to what Mr. Reed said, Mr. Bookbinder,
    would you clarify for me, so when somebody runs for President,
    they give up their expectations of privacy? Is that what----
        Mr. BOOKBINDER. Well, I think anyone who runs for President
    expects to have a lot less privacy than most individuals.
        Mr. KELLY. Okay. So anybody that is a candidate for
    President or serves in the office is an American citizen. Is
    that correct?
        Mr. BOOKBINDER. Yes.
        Mr. KELLY. Okay. So are we saying if you reach a certain
    level, even though you are an American citizen, you are subject
    to greater scrutiny than anybody else? And then my next
    question would be: So at what point do people say are you
    kidding me? Why would I ever run for any of these offices? It
    makes no sense.
        I don't want you to even answer that because I know what
    the answer is. But I want to really be clear. And I want each
    of you to say, and I want an answer. I am not--this may be--and
    I really appreciate your opinions. But you know what, may
    doesn't answer the question, because every time we ask you a
    question, well, this may be what happened, that may be what
    happened.
        Do the President and the vice president, not undergo the
    scrutiny of having their tax returns audited by the IRS?
        Mr. Thorndike, Dr. Thorndike. It is just a yes or no.
        Mr. THORNDIKE. Yes.
        Mr. KELLY. Okay. They do.
        Professor Yin.
        Mr. YIN. The internal revenue manual----
        Mr. KELLY. The question is--it is a yes or no, Doctor. I
    appreciate that, but we are going to run out of time.
        They are audited, are they not? Are not the President and
    the vice president audited for tax returns?
        Mr. YIN. The internal revenue manual does require it.
    Whether they in fact----
        Mr. KELLY. Okay. I know you don't sit on it, so you can't
    be sure. But you know what the answer is.
        Mr. Rosenthal.
        Mr. ROSENTHAL. I have the same response.
        Mr. KELLY. You don't know either. Okay.
        Mr. Bookbinder.
        Mr. BOOKBINDER. I believe so, but I don't think it
    addresses all the issues----
        Mr. KELLY. Okay. Mr. Kies.
        Mr. KIES. Yes.
        Mr. KELLY. Okay. Thank you. I am glad we had experts here
    that could maybe know but couldn't really know.
        I just want to be clear on this. Listen, this would not be
    taking place if we were not about a duly elected President by
    the name of Donald Trump sitting in that office. This is an
    incredible overreach. This is an oversight Committee. Our very
    role is to be the watchdogs to make sure that American citizens
    are protected.
        Now, if I were to go home to my hometown and walk up to
    somebody and say, I don't know that you realize it, but you
    know what, this 6103 is something right now that we really have
    to look at. And they are going to look at me, like, I have
    absolutely no idea what you are talking about. I would say in
    too many cases we have absolutely no idea what we are talking
    about or what we are leading to. This, I said earlier, is a
    Pandora's box. You take the lid off this, and you make anybody
    subject to this type of scrutiny.
        And it is hard for me to believe that since the mid 1970s
    when we had the Watergate fiasco, that the changes to the IRS
    then, especially what happened under President Nixon, that we
    are saying today, that this many years later, that we are just
    not sure that the IRS really knows how to do their job.
        I can remember not too many years ago--Mr. Reed, you sat
    here with me, whenever we talked about Lois Lerner. We
    questioned whether we thought the IRS was doing the right job
    of what was happening and the weaponizing of the IRS. We were
    told, listen, are you telling us you don't believe the IRS
    knows what they are doing. Now, that was not done by our side
    of the aisle, by the way. It was the other side of the aisle
    that said you can't possibly question the integrity of the IRS,
    and I do not question their integrity.
        Look, if there is better ways to do things, I think Mr.
    Reed hit on so many. I mean, this isn't the financial
    disclosures. If there are loopholes, if it is too wide, why not
    narrow it down?
        And one of the Members said this is not lazy legislation
    what we are doing. Well, if it is not lazy legislation, I guess
    we can find some other term for it. It sure as heck is not
    doing our job as legislators. If there is some confusion, then
    we need to straighten it out.
        There are better ways to do it. I understand that. As far
    as the trust and the faith the American people have, each one
    of us got elected for this very purpose, to protect their
    freedoms and liberties and their privacy. It is not to go after
    a political person that we just don't care for.
        Mr. Kies, am I missing something here tonight? I mean, you
    answered things pretty explicitly. And I know you all have this
    great deal of background. But when you can't say you know for
    sure that the IRS knows how to do an audit or if they are doing
    the audit, that is troubling to me. What else would you do?
    What else could we do to make this process better?
        Mr. KIES. Well, I actually think what Mr. Bookbinder has
    talked about is a more productive route of identifying the kind
    of information that you really want here, which is a more
    vigorous financial disclosure for people running for President.
    And you can steer clear of having to delve into releasing
    individual tax returns, which has never ever been done under
    Section 6103. And it is not a route that I think you should
    think about going down unless you are very, very careful. And,
    frankly, I think if there is other ways to get the information,
    it is much better to go in that direction.
        Mr. KELLY. Okay.
        Dr. Yin, you had something to say.
        Mr. YIN. I would just like to correct the record on that,
    because Mr. Kies has made the statement twice. He seems to have
    forgotten that both in 2014 and in 2015, 2014 in the House Ways
    and Means Committee, 2015 in the Senate Finance Committee,
    there was the use of exactly the authority we are talking about
    now combined with a public disclosure in each instance.
        Mr. KELLY. That was during a criminal investigation. Is
    that right?
        Mr. YIN. It was----
        Mr. KELLY. Yeah. Okay. It was. Thank you.
        Listen, I wish we had more time. I would really love this
    could go on for a long time. I know I share the same feelings
    as the chairman. Thank you so much for giving us your time and
    your expertise in weighing in on this.
        Let's make sure as we leave this room today, we are the
    oversight Committee. Our main role is to protect the privacy
    and the rights of every individual American citizen, of which
    our President happens to be.
        Mr. KIES. I would just add one thing. I agree with what
    George just said. What I would say is it has never been legally
    used. George and I both agree that what was done in 2014 and
    2015 was inconsistent with 6103. This Committee and--has never
    legally released an individual tax return under the authority
    of Section 6103.
        Mr. KELLY. It sounds like you and George get together a lot
    and discuss this. So thank you so much for your time.
        Chairman LEWIS. Let me just say to the Ranking Member, my
    friend, Mr. Kelly, it is my strong belief that the American
    people have a right to know. We live in a democratic society.
    We should know people running for office, the office of
    President and vice president, how they earn their money and
    what conflicts they have. So the hearing--this is not the end.
    This is just the beginning.
        I want to thank each member of the panel for your
    participation, for your contribution.
        Please be advised that Members have 2 weeks to submit
    written questions to be answered later in writing. Those
    questions and your answers will be made part of the formal
    hearing record.
        With that, the Subcommittee on Oversight stands adjourned.
    And thank you again.
        [Whereupon, at 5:34 p.m., the Subcommittee was adjourned.]
        [Submissions for the Record follow:]
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