Congress will soon have access to a treasure trove of information about President Trump’s taxes. It just needs to ask New York.
A new state law, which sailed through the New York Legislature and now awaits the signature of Gov. Andrew Cuomo, would allow the heads of Congress’s tax-writing committees to request a public official’s state tax returns to aid the committees in a “legitimate” task.
The law does not single out President Trump, but it will permit the House Ways and Means Committee — which has so far been stymied by the Treasury Department in its investigation of Mr. Trump’s taxes — to obtain evidence of his tax reporting practices and the results of I.R.S. audits. When Mr. Cuomo signs the legislation — which he has said he will do — Richard Neal, the chair of the House Ways and Means Committee, need only ask Albany for the records.
Mr. Neal never should have needed New York’s help here. A 1924 federal statute provides that the Treasury secretary “shall” furnish any individual’s tax records upon written request from the Ways and Means chairman or his Senate counterpart. Invoking that law last month, Mr. Neal requested six years of Mr. Trump’s tax filings to assist his panel’s inquiry into the I.R.S.’s audits of the president. Nevertheless, Steven Mnuchin, the Treasury secretary, denied that request as well as a subsequent congressional subpoena for the president’s returns.
The information that New York has in its possession will reveal whether Mr. Trump continues to zero out his taxable income with dubious tax losses and whether the I.R.S. has ever successfully challenged Mr. Trump’s tax-minimization moves.
To understand how the New York information could prove useful, it helps to understand why the Ways and Means Committee wants to see Mr. Trump’s tax files in the first place. Mr. Trump is the first president in 40 years to refuse to release his returns to the public. He is also the first president to boast openly and unabashedly about his use of tax shelters, which he described as “sport.”
These concerns are compounded by the president’s influence over the I.R.S., which is part of the executive branch. When the I.R.S. examines the president’s returns, it essentially audits its boss. That arrangement presents the risk that the I.R.S. will bend over in audits of the president and allow deficiencies to slip by.
History offers reason for real concern. The I.R.S. allowed President Richard Nixon to underpay while he was president by roughly $475,000 — or about half his net worth — before congressional investigators caught wind.
The Nixon episode prompted the I.R.S. to establish a special procedure for examining the president’s personal income tax returns each year — a procedure designed, among other objectives, to reduce the risk of improper influence. But it’s not clear whether this procedure applies to returns filed by Mr. Trump that he says were under audit when he assumed office or just the returns he filed afterward. On top of that, it’s not clear whether the procedure — which shifts the audit to a special team in Baltimore and walls off other I.R.S. employees — is sufficient to stop possible political meddling.
The Ways and Means Committee is trying to get to the bottom of this, and it needs to see the president’s tax returns and the associated I.R.S. work files to determine whether agency audits of the president are, as Mr. Neal puts it, “fair and impartial.” Until a court orders the Treasury and the I.R.S. to comply with the committee’s document demand, it could glean much from New York’s data.
Mr. Trump, a lifelong New Yorker, is required to file state income tax returns every year. Those returns will reveal, for example, whether he reports anything at all in adjusted gross income. We already know that he claimed tax losses to offset his income from 1985 to 1995. His New York State returns will show whether he made similar assertions in later years.
Even more important, Mr. Trump’s New York returns will allow House investigators to reconstruct the results of any past audits. State law requires taxpayers to file amended New York returns whenever the I.R.S. has made changes to the taxpayer’s federal returns. By comparing Mr. Trump’s amended returns to his state returns over time, House investigators can learn whether the I.R.S. came down hard on Mr. Trump before he took office and whether the pattern has changed since he took charge.
The New York returns won’t tell House investigators everything they need to know. They won’t, for example, reveal whether and why I.R.S. examiners chose to give the president a pass on a questionable position. For that, the Ways and Means Committee will need to see the president’s full federal tax records — including the I.R.S.’s work files.
What the New York returns will do is give the House a scoresheet of past I.R.S. examinations of Mr. Trump, both before and after he entered the Oval Office. That’s a significant start.
Obtaining the New York returns won’t be the end of the inquiry by Mr. Neal’s committee, but it will be a major step forward in the investigation that Mr. Trump won’t be able to block.