Tax Revolts, Tax Marches, and the Politics of Transparency in U.S. History

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On April 15, taxpayers across the country will come together to demand “transparency and fairness” from President Donald Trump. Organizers of the Tax Marches hope to build on the momentum of the Women’s Marches and the momentum of the demonstrations against the January Travel Ban to exert public pressure on Trump to do what every president since Richard Nixon has done: release his tax returns to the public.

Of course, President Nixon divulged his tax information only under considerable public and legal pressure. In 1973, in the thick of the Watergate investigations that eventually pushed him from office, Nixon found himself in trouble over his taxes. It began over the summer, when the Washington Post began digging into a deduction Nixon had taken for the donation of some records to the National Archives. The problem became even more pressing a few months later when someone at the Internal Revenue Service leaked the president’s tax information to the press. By November public pressure on the president to release his tax information had become irresistible. By December, the White House had agreed to provide the Joint Committee on Internal Revenue Taxation (JCIRT)—a relatively low-profile Congressional Committee with a reputation for nonpartisanship and an expert professional staff—with the president’s latest tax returns.

Nixon’s tax troubles were as much political as they were legal. Perhaps most damning was the revelation that the he and his wife had paid only $792 in federal income taxes in 1970 and only $878 in 1971, despite an income of more than $250,000 in each of those years. The press was quick to point out that this tax bill was about how much someone earning between $7,000 and $8,000 a year might pay.

Nixon should have known better. After all, he had been elected on the strength of his appeal to the to the “Forgotten Americans”—those “good” and “decent people” of Middle America whom Nixon himself had described as the folks who “work… save… [and]pay their taxes.”

Nixon’s appeal to hardworking taxpayers tapped a deep vein in American political history. Indeed, the 16th amendment to the Constitution, which allowed for the federal income tax, was actually the product of a grassroots revolt against a tax system that favored Gilded Age Robber Barons. Only a progressive income tax, these turn-of-the-century populists argued, would bring an end to “oppression, injustice, and poverty” and restore “equal rights and equal privileges for all.” A few decades later, President Franklin Roosevelt likewise exposed how “economic royalists” manipulated tax loopholes in order to mobilize popular support for New Deal tax and spending policies. In 1935, to build support for the Revenue Act of 1935—sometimes referred to as the Wealth Tax—Roosevelt held a press conference to expose 58 taxpayers with more than $1 million in income who had used loopholes in the tax code to shield much of their money from federal taxes. Making “Poor Little Rich Men pay,” one New Deal supporter noted, “was U.S. problem No. 1.”

Even now, most Americans oppose reducing taxes on the wealthy by a healthy margin. According to a recent poll, only 21 percent of Americans think that the President and Congress should cut taxes on the rich. Even among the GOP faithful, support for top bracket tax cuts is lukewarm at best. 41 percent of self-identified Republicans support tax cuts for the wealthy; 51 percent oppose them.

The same was true in the Nixon Era. Indeed, during his first months in office, the new president had learned just how unpopular the tax privileges of the rich could be. As a parting shot to the incoming Republican administration, officials in President Lyndon Johnson’s Treasury Department released the names of some two hundred “wealthy individuals who had used loopholes in the tax code to reduce, or even eliminate their federal taxes.” This list of “tax millionaires” ignited a firestorm of public outrage, whose intensity “rivaled the student protests against the Vietnam War.” Irate taxpayers inundated their members of Congress and the White House with letters, telegrams, and phone calls demanding the tax privileges of the rich be eliminated and ordinary taxpayers’ burdens reduced.

This incipient taxpayers’ revolt produced the Tax Reform Act of 1969. And it ought to have made Nixon think twice before taking advantage of any of “intricate, subtle and difficult” tax laws that allowed wealthy taxpayers to escape federal taxation. The president’s own advisors had convinced him to sign the law on the grounds that a veto would be “interpreted as denying taxpayers, especially low income taxpayers… advantages… while protecting upper-income taxpayers against the loss of their loopholes.” Killing the bill, his staff warned, would risk alienating “a fair portion of the ‘great Silent Majority.’”

Ironically, it was the Tax Reform Act of 1969 that ultimately led to much of Nixon’s tax troubles.

Included in the 1969 law was a provision limiting the tax deduction public officials could take for donating records to the National Archives. Until 1969, federal tax law allowed government officials to deduct the full, appreciated market value of donated materials. The Tax Reform Act of 1969 closed this loophole, limiting the value of the deduction on any gift made after July 25, 1969 to the cost of the paper the records were printed on.

Nixon took the full deduction for his pre-presidential papers, claiming a $576,000 charitable donation in 1969 that carried forward to later tax years. Unfortunately, for the president, he didn’t file the paperwork correctly. Congressional investigators later found that the deed of gift transferring the papers had not been delivered to the Archives until April 10, 1970—well after the 1969 deadline. Congress also found that the President had failed to declare capital gains on real estate sales in New York and California.

Nixon’s tax troubles ultimately cost him almost a half million dollars. They also emphasized the importance of transparency in presidential finance. As the New York Times editorialized in November of 1973, “full financial disclosure is an essential in restoring public trust in the nation’s elected leadership.”

Historians have pointed to similarities between the Trump and Nixon White Houses. Trump’s appeal to “law and order” and the “forgotten Americans” were borrowed straight from the Nixon playbook. His attacks on the “fake news” echo Nixon Vice President Spiro Agnew’s attacks on the so-called “nattering nabobs of negativity.” Some Trump associates cut their teeth in Nixon World. Roger Stone, a sometime Trump advisor, bit player in Watergate, and self-proclaimed “ratfucker,” even has a Nixon tattoo on his back. The “drip-drip” of news about the Russia connection is familiar to anyone who has traced the slow development of what became the Watergate scandal.

Of course, unlike President Nixon, who had to work with a Democratic Congress, Trump’s own party controls both the House and Senate. They have thus far been unwilling to exert much pressure on the President. Democrats in Congress have recently signaled a willingness to hold up Republican efforts at tax reform until they know how changes to the tax code might personally benefit the president and his family. As Sen. Ron Wyden, the Ranking Democrat on the powerful Senate Finance Committee, has noted, “The American people want to see what this is about. Are our interests being protected or are these deals that somehow promote his interests?”

What we do know about Trump’s taxes—thanks to the two pages of his 2005 1040 form leaked to reporter David Cay Johnston—is that he could reap a major windfall from one of the most likely targets for tax reform: the Alternative Minimum Tax. Other common tax reform proposals, including changes to how businesses can deduct net interest expenses, might also have significant consequences for Trump’s portfolio. But, without knowing more about where and how the president makes his money, it’s impossible to know if he’s acting in the public interest when he pushes one tax reform over another.

Molly Michelmore is an Associate Professor of History at Washington and Lee University in Lexington, Virginia whose work investigates the relationship between tax and spending policy and politics in the 20th century United States. A former Congressional staffer and fellow at the Miller Center for Public Affairs, Michelmore’s first book, Tax and Spend: Welfare, Taxes and the Limits of American Liberalism, was published by the University of Pennsylvania Press in 2012.

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