One of the more debate-worthy bills at our Legislature (Senate Bill 94) involves requiring candidates for President and Vice President of the United States to post their tax returns on the Internet. If they don’t, the bill says, they won’t appear on the Hawaii ballot and even if they somehow win, the folks that we send to the Electoral College won’t be allowed to vote for them.
Is this kind of restriction even legal? After all, the qualifications for federal elected office are prescribed by the Constitution of the United States. Does the state have any business adding to those qualifications from their own perspective? The Supreme Court already has said no. In Arkansas, voters amended their state constitution to set term limits on their own Congressional Representatives and Senators, and if the term limit was up, the candidate’s name would not appear on the ballot. The Supreme Court, in U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779 (1995), held that Arkansas couldn’t do that. That’s why our own Attorney General has raised questions about this bill.
In addition, we in Hawaii have a constitutional right to privacy. Private information includes financial information, and information on tax returns is confidential under our state law, as it is in all states. We ask taxpayers to bare their souls, or at least the financial part, to our tax agencies so they can collect the right amount of tax; and in return, we instruct our agency workers, under pain of criminal penalty, not to share that information with others unless they have a legitimate right to know.
Occasionally, we require people aspiring to higher office to make financial disclosures. We see these requirements as necessary to protect transparency and ethical behavior. If we know what companies a responsible government officer has a financial interest in, for example, we can scrutinize those transactions more carefully for any conflicts of interest.
What people might not already know is that candidates for President and Vice President of the United States already are required to make financial disclosures to the Federal Election Commission, which then turns over the information to the Office of Government Ethics. The financial disclosures for the President and Vice President can be downloaded from this page. The law prescribing the contents of those reports, 5 U.S.C. App. § 102, requires disclosure of the source, type, and amount of income from any source, including honoraria; all gifts, other than from family; all liabilities exceeding $10,000; and tons of other information, more extensive than that normally found on a tax return. President Trump’s financial disclosures for 2017 and 2018 were 98 and 92 pages, respectively. With that kind of information already available publicly, one needs to wonder what, if anything, disclosing a federal tax return would add.
Thus, we raise the question, “Why do we need this bill?” Do we need it to thumb our noses at the President and Vice President? Do we want to help the IRS because we think that embarrassing or false information may be in those returns and that the IRS won’t be able to deal with it? Are we trying to prove that Hawaii has more ethics than anywhere else? And if we think it’s such a great idea, why don’t we apply it to state executives, judges, or legislators?
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Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.