David Cay Johnston: What Is Trump Hiding in His Tax Returns?

David Cay Johnston: What Is Trump Hiding in His Tax Returns?

David Cay Johnston: What Is Trump Hiding in His Tax Returns?

The Pulitzer Prize–winning investigative reporter explains what’s likely in Trump’s returns.


David Cay Johnston is a Pulitzer Prize–winning investigative reporter who previously worked at The New York Times. He’s the founder and editor of DCReport.org. His most recent book is It’s Even Worse Than You Think: What the Trump Administration Is Doing to America. This interview has been edited and condensed.

Jon Wiener: The chair of the House Ways and Means Committee formally requested six years of Trump’s personal and business tax returns earlier this month. Trump, of course, refused to comply, and said the law is “100 percent” on his side. Does the IRS have to hand over Trump’s tax returns to the chair of the House Ways and Means Committee?

David Cay Johnston: If they follow the law, they absolutely have to hand them over. Under a 1924 anti-corruption law that was passed because of Teapot Dome, a Harding-administration scandal, Congress can look at anybody’s tax return at any time. In the 85-year history of this law, the IRS has always responded appropriately to the request and turned over everything that was requested.

JW: What are the exceptions to this law?

DCJ: There aren’t any. It says, “Congress shall provide upon written request.” That’s it. Well, they have a written request, it’s a specific request, and therefore they shall provide. The statement by Donald Trump that the law is 100 percent on his side is just classic Trumpian lying: Take something that is true, and state the exact opposite.

JW: Does the IRS commissioner have any alternative to handing over Trump’s tax returns? What happens if he doesn’t comply?

DCJ: There’s another section of the tax code which says that any federal employee dealing with any aspects of the tax code who either does not comply, or who fails to act—covering both sins of omission and commission—”shall be removed from office, and is subject to prosecution and upon conviction, five years in prison and a $10,000 fine.”

JW: Who enforces this law? It’s not just up to Attorney General William Barr—is that right?

DCJ: That’s correct. First of all, a US Attorney’s office could enforce the action, although that seems unlikely in this administration. But the next administration, if it chooses, could go back, and even if the IRS commissioner has left, prosecute him for failure to turn over the documents. Of course, Congress can hold the commissioner in contempt, and Congress can also go to federal court to enforce its orders. It can. And has in the distant past even tried people itself.

JW: The IRS commissioner is a man named Charles Rettig, and he’s a Trump appointee. Tell us a little about Charles Rettig.

DCJ: At DCReport we call him “Donald Trump’s man at the IRS.” Almost every IRS commissioner has been a tax lawyer, but Charles Rettig is not like most of those other tax lawyers. He isn’t in the business of tax planning. He’s in the business of representing tax cheats who get caught, and his specialty is keeping them from being indicted. As we put it, “He’s one of the foxes who is not just in charge of the hen house. He’s in a position to redesign the hen house.”

JW: Trump’s personal lawyer last week urged the Treasury Department not to hand over Trump’s tax returns. He said that to comply with their request would turn the IRS into a political weapon of the radical Democrats. Is that a good legal argument?

DCJ: No. It may be a good political argument with Trump’s base, but as a legal matter, if my students at Syracuse Law were to bring that up, I would have to work hard not to laugh at them—because it’s a ridiculous argument. There is no limit in Section 6103 that says you can only ask for a tax return if you’re a Republican, or if you hew to certain political views. It simply says, “Upon written request, the return shall be provided.” It could not be more clear.

JW: The boss of the IRS commissioner is the treasury secretary, Steve Mnuchin. He said sort of the opposite of what Trump’s personal lawyer said. He said, “Our intent is to follow the law.” How do you explain the difference between the legal positions of Trump’s personal lawyer and Trump’s treasury secretary?

DCJ: This is exactly what got me onto this story. I noticed that Trump, his lawyers, and the acting White House chief of staff, Mick Mulvaney, were making these wild, reckless, lawless statements. But Mnuchin, the Treasury secretary, and Rettig, the IRS commissioner, both made nuanced statements, and carefully avoided refusing to comply, and instead said, “We’re trying to understand how to comply with law. It is our intent to comply with the law, but we need more time to learn what the law says.” It should take you literally about 10 seconds to learn what the law says. That’s when I thought, “What’s going on here?” It’s what got me on to the section of the tax code that says, in effect, that any federal employee who interferes, obstructs, or fails to act, is subject to removal, prosecution, and fine. I think what Mnuchin is trying to do here is thread a needle. He wants to continue to show his loyalty to Trump. Not to our Constitution, as his oath of office requires, but to Trump. He’s trying to evade the law that says there must be compliance with the request, without going to jail.

JW: The New York Times news story on this reported that “The fight over Mr. Trump’s tax returns is expected to turn into a protracted legal battle that will likely make its way to the Supreme Court.” Do you think that’s right, and does the Republican majority on the court have a way to rule in Trump’s favor?

DCJ: It may lead to a protracted fight. It’s also possible that this will get fast-tracked and get right to our Supreme Court. As someone who reads Supreme Court decisions, I don’t particularly care for the jurisprudence of John Roberts, the Chief Justice of the United States, but nothing in his opinions suggests that he would sell the soul and the integrity of the court to favor Donald Trump. Every indication is that he would uphold the law. I would not be surprised if you got a 7-2 or 9-0 decision from the Supreme Court that the IRS has to turn over the documents.

JW: The really interesting question is, what do you think is in Trump’s tax returns? Why do you think he’s trying so hard to keep them secret?

DCJ: There are at least three reasons here. Number one, Trump’s tax returns will show that he is not anywhere near as wealthy as he claimed. Remember during the campaign he kept saying he was worth more than $10 billion. But after he became president, he signed under oath his financial disclosure statement, and 90 percent of his wealth vanished. Even that statement, which I’ve analyzed, overstates his wealth. There’s never been a scintilla of verifiable evidence that Trump is a billionaire. And I’m the guy who revealed, back in 1990 when he said he was worth $3 billion, that he wasn’t a billionaire. We eventually found that he had negative net worth of about $295 million—minus $295 million.

Secondly, Donald Trump is a tax cheat. He had two civil trials for income tax fraud, one by the State of New York and the other by the City of New York. In both cases he lost. In one of those trials, his own long-time tax attorney and accountant, Jack Mitnick, testified against him. Mitnick was shown the filed tax return, which was a photocopy, and testified, “That’s my signature on the return, but neither I nor my firm prepared that tax return.” That’s as good a badge of fraud as you’re ever going to find. It indicates that Donald Trump took the tax return that was prepared, changed it, and then with a photocopy machine put the signature of Jack Mitnick on it. Donald Trump is also a confessed sales tax cheat. Mayor Ed Koch of New York said he should have served 15 days in jail for his crime. Trump has a long history of hiding records from auditors, cheating governments, using two sets of numbers. So his tax returns are highly likely to show tax cheating.

Finally, the returns may well establish how much money he has been getting from Russians, Saudis, people from the Emirates, and elsewhere. They may show whether he has been engaged in money laundering for these people through real estate transactions and other actions that make no business sense, but, when closely examined, show exactly what we see when there’s money laundering. I think the record is pretty clear that he has been doing that.

JW: A technical question: Where do you report payments from Russian oligarchs on your tax return?

DCJ: Trump has over 500 business entities, and the tax return is the beginning point for an audit. You then would examine the books and records that are behind it. Now, Trump has a long history of destroying or claiming he destroyed business records to thwart auditors. This happened particularly with the City of New York when he tried to cheat the city out of about $2.9 million. But there may actually be transactions reported right in the tax return that would tell you where money came from–because it may list entities to which he is obligated, or is in partnership with, or received money from, or shared profits with. The request by Chairman Neal of the House Ways and Means Committee was very targeted. It cited six specific Trump businesses—out of over 500 businesses. That suggests to me that they know what they were looking for.

JW: What do you think the political effect would be if voters learned from Trump’s tax return that he has been a tax cheat? As I recall, this was a huge issue in the final downfall of Richard Nixon.

DCJ: That’s right. This was a big scandal in 1974. Nixon was pardoned, so nothing happened to him, but his tax lawyer went to prison. By the way, the very law that exposed Nixon as a tax cheat is the same law that the Trump people are now trying to resist. I frankly think that among people who are strong Trump supporters, this will have little impact. The impact that would matter is on people on the margin. People who have been with Trump but are uneasy with him because of all of his other behavior. And if he has committed federal tax crimes, then he has committed New York State tax crimes, because New York State tax law hews very closely to federal law. So one would hope that, if they have solid evidence that he’s a tax cheat, that a grand jury will be impaneled and the state will in fact indict, prosecute, and if convicted, imprison Donald Trump as a tax cheat.

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