I testified before the Ways and Means Subcommittee on Oversight yesterday on whether presidents, vice presidents, and candidates for these offices should disclose their tax returns. I made three arguments:

First disclosing tax returns of presidents, vice presidents, and candidates for these offices is important because it increases public confidence in the government and support for our voluntary tax system. Our tax system is based on self-assessment.  For it to work properly, taxpayers must be confident that it is fair.  

Disclosure of tax returns to the public can help. Tax returns reveal effective tax rates, which is the amount of taxes paid divided by total taxable income. Effective tax rates are useful to measure whether a taxpayer pays his or her “fair share” of taxes. Tax returns also show to the dollar the source and nature of income, losses, and deductions.

Second, 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 develop new legislation.

Third, there are two paths to obtain tax information on presidents and vice presidents: (1) existing 6103(f) of the Tax Code, which permits the Committee on Ways and Means to request tax information on presidents or vice presidents that is held by the IRS; and (2) new legislation, like H.R. 1, that would require presidents and vice presidents to disclose a minimum number of years of tax returns. Both paths are important.

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.

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 the information to require.It may not foresee how a future president will make his or her income—or what potential conflicts may arise. For these circumstances, Congress could still use sec. 6103(f), to obtain extra years of returns or wider information on a president or vice president.

In my view, (1) the public would benefit from the disclosure of tax returns of presidents and vice presidents, and candidates for these offices, (2) Congress could help fulfill its oversight responsibilities by obtaining tax information on presidents and vice presidents, as appropriate, and (3) there are two paths to obtain tax information—the existing legal framework and the possibility of new legislation—and both are important.

The Ways and Means Committee has its work cut out: It should both request tax information on the president that is available at the IRS—and pursue legislation for the routine disclosure of tax returns by future presidents.