Trump Picks Crony to Audit His Taxes

Photo by Taymaz Valley | CC by 2.0

The United States has long been viewed as a country with a tradition of respect for the rule of law. Political figures were held accountable to the courts and independent bureaucracies enforced rules and regulations. This didn’t mean there wasn’t any corruption; some level of corruption is unavoidable. But corruption was the exception and for the most part it was kept secret. Unlike many dictatorships, exposure meant the end of corruption. In the Trump presidency, this longer appears to be the case.

Donald Trump has been defying the rules and norms that had governed past presidencies from even before he was elected. There has been a longstanding tradition in U.S. politics that candidates for president disclose their tax returns. This allows the public to see potential conflicts of interest and also to assess a candidate’s past behavior to determine if they have acted ethically in acquiring the wealth they have.

Throughout the campaign, Trump refused to release his tax returns claiming that he was being audited by the Internal Revenue Service (IRS). He indicated that he would disclose his returns once the audit was completed. This claim made no sense since there is nothing about an audit which would preclude public disclosure. The IRS already has his returns, so it wouldn’t be getting new information that would be harmful to Trump if the returns were made public.

In any case, this excuse seems to have disappeared on Election Day, with Trump adopting the new position that the public had voted and decided they didn’t care if Trump shared his returns. Instead of committing to the release of his tax returns after the audit, he committed never to release his returns.

But this was just beginning of the Trump administration’s contempt for the law and long-established practices. Unlike past presidents, he refused to either disinvest from his business empire or even have it placed in a blind trust. Instead, he had his holdings placed in a revocable trust, which allows him to retake control at any time. His children maintain day- to- day responsibility for running the business.

He quite openly uses his office to profit from his business. He routinely spends weekends at his various resorts where he forces the government to run up large bills paying for accommodations for his Secret Service protection, as well as for aides who accompany him on his trip.

Major lobbying organizations, like the National Rifle Association, have made a point of scheduling events at Trump properties, presumably with the idea of currying favor. (On the other side, some prominent charities have cancelled events at Trump properties, presumably because many contributors would be offended.)

There are also reports that State Department officials have recommended that foreign governments make a point of using Trump hotels to stay on the administration’s good side. This would seem to run directly counter to a provision placed in the U.S. constitution that explicitly prohibits the president from taking payments from foreign governments.

But Trump’s personal corruption is just the beginning of the breakdown of the rule of law in the Trump administration. Trump has appointed officials to head departments and regulatory agencies who are closely tied to the industries they are supposed to regulate. And, they have maintained these ties even while in office.

For example, Trump has put lobbyists for the some of the regulated industries into top positions at the Environmental Protection Agency. The head of the agency, Scott Pruitt, routinely meets with the industry groups, often without proper disclosure.

An even more extreme practice has been appointing temporary acting agency heads rather than nominating permanent agency heads. The difference is that a nominee must disclose their tax records and be subject to questioning and scrutiny by Congress. Someone who fills a position on a temporary basis has no comparable check on their behavior.

Trump’s first major use of this tool of evasion was picking Keith Noreika as acting Comptroller of the Currency, an agency with substantial responsibilities for oversight of the financial industry. Noreika had spent his career as a lawyer representing banks, not as a regulator. As an acting agency head, Mr. Noreika was supposed to be limited to serving 120 days. He now has been in this position for almost 180 days, with no end in sight.

But it gets worse. Last month the Trump administration announced its intention to replace the current Commissioner of the I.R.S. with an acting director when his term expires on November 13th. Trump’s selection, David Kautter, is a person with no experience in tax enforcement. In fact, Kautter has spent his entire career as a high-powered tax lawyer working on tax avoidance strategies.

This should raise serious concerns about Mr. Kautter’s commitment to enforcing the tax code. In this respect, it is worth noting the situation of Robert Mercer. Mercer is a Wall Street billionaire who is a major contributor to Republicans, as well as an underwriter of Breitbart, the right-wing website and other conservative causes. The I.R.S. has determined that Mercer’s hedge fund violated the law and owes $7 billion in taxes and penalties.

It is not clear if Kautter will uphold this earlier assessment. A reversal would put a lot of money in Mercer’s pocket, a substantial portion of which is likely to find its way back to Republican politicians. And, of course, there is also the fact that Mr. Kautter will ostensibly be involved in overseeing the review of Donald Trump’s own taxes, which are still under audit, if the president is to be believed on this point.

These sorts of conflicts of interest are not supposed to arise in the United States, where the rule of law is supposed to take precedence. But Congress is the entity that most immediately is supposed to pose a check on these sorts of abuses and the Republican leadership has said as clearly as possible that it doesn’t care.

This article originally appeared in The Hankyoreh (South Korea).


Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC.