Keith Mack
While there is no legal requirement for sitting presidents to release their tax filings, doing so has been a tradition since the Nixon administration. Every president from Nixon to Obama has released their full tax returns to the public, with the exception of Gerald Ford, who released a tax summary. However, President Donald Trump refused to disclose his tax returns, leading to extensive research by The New York Times to uncover the information. This resistance to transparency has raised questions about Trump's actual wealth and tax compliance. Richard Nixon, the first president whose tax returns were leaked, was found to have taken questionable deductions to reduce his tax liability, paying very little in taxes despite earning over $200,000. Additionally, it is worth noting that at least seven US presidents, including Abraham Lincoln and Andrew Johnson, avoided paying income taxes on their official salaries due to a constitutional interpretation at the time.
| Characteristics | Values |
|---|---|
| Presidents who violated tax laws | Abraham Lincoln, Andrew Johnson, Ulysses S. Grant, William Howard Taft, Woodrow Wilson, Warren G. Harding and Calvin Coolidge |
| Presidents who refused to release tax returns | Donald Trump |
| Presidents who released tax summaries | Gerald Ford |
| Presidents who released tax returns | Jimmy Carter, Ronald Reagan, George H. W. Bush, Bill Clinton, George W. Bush, Barack Obama, Joe Biden |
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What You'll Learn
Presidents who avoided paying income taxes on their salaries
At least seven U.S. presidents avoided paying income taxes on their official salaries. This stems from the Constitution's requirement that "the president shall, at stated times, receive for his services, a compensation, which shall neither be increased nor diminished during the period for which he shall have been elected." Until at least the late 1920s, this provision was widely understood to prohibit the taxation of presidential salaries.
As a result, Presidents Abraham Lincoln, Andrew Johnson, and Ulysses S. Grant, William Howard Taft, Woodrow Wilson, Warren G. Harding, and Calvin Coolidge seem to have avoided paying income taxes enacted during their terms. While several of them made payments on other kinds of non-salary income, all of them avoided paying taxes on their official compensation. In 1869, Attorney General Ebenezer Rockwood Hoar advised the Treasury that judicial and presidential salaries could not be taxed, and as a result, Lincoln, Johnson, and Grant received refunds for taxes paid during their presidencies.
In 1913, Congress accepted Hoar's reasoning from 1869 and made presidential salaries explicitly non-taxable when crafting the Revenue Act. Even without this exclusion, Taft would have barely been subject to income tax on his official salary, as he left office on March 4, 1913, and only his compensation during his last three days in office would have been taxable.
After Coolidge, the trail runs cold, as personal tax records of former presidents are protected from official disclosure. However, it is known that Franklin D. Roosevelt and Harry S. Truman paid income taxes throughout their presidencies, including on their official salaries. Since 1973, every president has released a tax return during every year in office, with the exception of Donald Trump, who refused to disclose his tax returns until they were uncovered by The New York Times.
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Richard Nixon's tax scandal
While there is no law requiring sitting presidents to release their tax filings, doing so is considered beneficial to their image. Every president from Nixon to Obama has released their full tax returns to the public. Richard Nixon's tax returns were the first to be revealed to the public, although they were leaked by someone in the IRS rather than being released voluntarily.
Nixon's tax returns revealed that he had paid very little in taxes. Media reports suggested that Nixon paid only $792 in federal income tax in 1970 and $878 in 1971, despite earning over $200,000 in each of those years. On July 30, 1973, Tax Analysts accused Nixon of taking questionable deductions, specifically regarding his donation of official papers to the National Archives.
In response to the scandal, Nixon asserted, "I am not a crook," which became one of the most infamous statements in presidential history. An investigation concluded that while Nixon had not properly paid his taxes, he did not purposefully commit fraud. Nixon was the first sitting president to be audited by the Congressional Joint Committee on Internal Revenue Taxation. He was charged over $400,000 in back taxes.
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Presidential candidates who refused to release tax returns
While there is no law requiring presidential candidates to release their tax returns, it has been standard practice since Jimmy Carter to do so. This allows candidates to allay fears about any conflicts of interest and show that they are paying taxes like other taxpayers. However, some presidential candidates have refused to release their tax returns, the most notable recent example being Donald Trump.
Trump's refusal to release his tax returns broke a precedent maintained by every president since Jimmy Carter. During his campaign, Trump stated that he would not release his tax returns while he was under audit by the IRS. However, this explanation was refuted, as IRS audits do not restrict anyone from publishing tax returns. Despite pressure from voters and the media, Trump did not release his tax returns, and his press secretary, Kellyanne Conway, maintained his stance, stating that he would not release them even after the audit was completed.
Trump's decision to withhold his tax returns sparked controversy and raised doubts about his actual wealth and tax payments. It also led to extensive research by The New York Times to uncover information about his finances. Trump's refusal to disclose his tax returns could have been influenced by the potential political downside, as suggested by Steve Inskeep of NPR, or the possibility that it could impact impeachment proceedings, as implied by a commentator on Robertreeveslaw.com.
Other presidential candidates who declined to release their personal tax returns include Brown, Buchanan, Huckabee, Forbes, Giuliani, Lugar, and Nader. Gerald Ford, Nixon's successor, also did not release his full tax returns but provided a summary of his taxes, including gross income, taxable income, major deductions, and taxes paid.
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Gerald Ford's tax summary
While there is no legal requirement for sitting presidents to release their tax filings, it has been a convention for US presidents to do so since the 1970s. This tradition ended with President Donald Trump, who refused to disclose his tax returns.
Gerald Ford, who succeeded Richard Nixon, did not release his full tax returns. However, when he ran for president in 1976, he provided a summary of his taxes, including a decade of personal tax information. This summary included his gross income, taxable income, major deductions, and taxes paid.
Ford's tax summary was notable for its comprehensiveness, covering a ten-year period. It provided insight into his financial situation and demonstrated his willingness to share some information with the public.
During his presidency, Ford also addressed the nation upon signing the Tax Reduction Act of 1975. He had urged Congress to pass a $16 billion reduction in federal income taxes to stimulate economic activity and create jobs. While the final bill included some drawbacks, Ford signed it due to the urgent need for an anti-recession tax reduction.
Additionally, Ford's administration played a relatively modest role in shaping the Tax Reform Act of 1976. This act was considered ambitious but limited, and the lack of leadership from the White House hindered its effectiveness.
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The Ethics in Government Act
While there is no law requiring sitting presidents to release their tax filings, doing so is considered beneficial to their image and helps build trust with the American electorate. Starting with Jimmy Carter, every president up through Barack Obama voluntarily released their tax returns for every year they were in office. Notably, Donald Trump refused to disclose his tax returns, which led to extensive research by The New York Times to uncover the contents of his returns.
Now, onto the topic of the Ethics in Government Act (EIGA). The EIGA is a United States federal law passed in 1978 in response to the Watergate scandal and the Saturday Night Massacre during the Nixon administration. The primary objectives of the EIGA are to promote transparency and accountability in government and prevent corruption. Here are four to six paragraphs detailing the key provisions and impact of the EIGA:
- Office of Government Ethics (OGE) and Designated Agency Ethics Official (DAEO): The EIGA established the creation of the OGE and the position of a DAEO in each executive branch agency. The OGE oversees the executive ethics program, provides guidance, and coordinates with agency officials. It is not an enforcement agency but seeks voluntary compliance.
- Financial Disclosure and Conflict of Interest Prevention: The EIGA mandates public disclosure of financial and employment history for certain designated public officials and their immediate family members. Senior government employees must disclose sources of income, liabilities, gifts, and transactions. This helps prevent and identify potential conflicts of interest arising from personal finances.
- Restrictions on Lobbying Activities: The EIGA imposes restrictions on lobbying efforts by public officials after they leave public office. The length of prohibition for lobbying work was increased from one year to two years. This aims to reduce the influence of special interests and ensure former officials do not exploit their previous positions.
- Ethical Norms and Integrity: The EIGA promotes adherence to ethical norms and the integrity of public officials and institutions. It encourages an ethical culture within government agencies, providing ethics advice, counseling, and education to employees. This includes addressing issues such as gifts, travel, outside employment, and political activities.
- Impact on Public Trust: The implementation of the EIGA has helped restore confidence in the government after the Watergate scandal. By requiring financial disclosure, the public can be assured that officials are acting in the public's best interest and not for personal financial gain. However, recent scandals have highlighted the limitations of the EIGA and the need for continuous strengthening of ethics programs.
- Criticisms and Proposed Improvements: While the EIGA has been praised for its contributions to transparency, it has also faced criticism for being either too weak or too strong. Specific provisions, such as the powers of the Special Prosecutor, have been controversial. Additionally, the wealth of President Trump's cabinet and complex financial disclosures have brought attention to the EIGA's shortcomings. Proposed improvements include establishing an independent inspector general for ethics investigations and enhancing mechanisms for enforcing ethics-related information disclosure.
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Frequently asked questions
No, there is no law requiring US presidents to release their tax filings. However, it has been a tradition for presidents to do so since the Nixon administration.
Two US presidents have refused to release their tax filings: Gerald Ford and Donald Trump. Ford released a tax summary, while Trump's tax filings were obtained by The New York Times from anonymous sources.
While it is unclear whether any US presidents have violated tax laws, there have been several instances of presidents engaging in questionable tax practices or avoiding taxes. Richard Nixon took questionable deductions to reduce his tax liability, and at least seven US presidents, including Abraham Lincoln and Andrew Johnson, avoided paying income taxes on their official salaries due to a constitutional interpretation.
While there may be political consequences for a US president violating tax laws, such as damage to their public image and trust with the electorate, there do not appear to be any specific legal consequences outlined in the sources provided.
By law, the Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation may obtain, inspect, and disclose the confidential tax information of any taxpayer without their consent. This authority has been used to obtain President Trump's tax returns.
