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Tax-return fight tests Mnuchin's loyalty to Trump

Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Democrats accuse Mnuchin of sabotaging economy in dispute with Fed The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Pence, Biden wage tug of war over pandemic plans MORE faces a challenging test after Democrats formally requested President TrumpDonald John TrumpBiden to nominate Linda Thomas-Greenfield for UN ambassador: reports Scranton dedicates 'Joe Biden Way' to honor president-elect Kasich: Republicans 'either in complete lockstep' or 'afraid' of Trump MORE's tax returns.

Mnuchin has been one of Trump's most loyal Cabinet members, defending the president's policies and personal conduct when others have shied away.

Now as the president's chief line of defense he will have to balance his loyalty to Trump against a request that many experts say leaves him little wiggle room.

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“[The] request tests Mnuchin’s oath of office: whether Mnuchin will faithfully execute the laws of the United States, or whether Mnuchin will bend to the will of the president,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center who testified before Congress in February about the need to request Trump’s tax returns.

House Ways and Means Committee Chairman Richard NealRichard Edmund NealOvernight Health Care: Trump announces two moves aimed at lowering drug prices | Sturgis rally blamed for COVID-19 spread in Minnesota | Stanford faculty condemn Scott Atlas Trump announces two moves aimed at lowering drug prices IRS races to get remaining stimulus checks to low-income households MORE (D-Mass.) Wednesday evening sent IRS Commissioner Charles Rettig a request for six years' worth of Trump’s personal and business tax returns. Neal made the request under a part of Section 6103 of the federal tax code that states that the Treasury Secretary “shall furnish” tax returns to the chairmen of Congress’s tax committees upon written request, so long as the documents are viewed in a closed session.

Trump — the first president in decades to not voluntarily disclose any of his returns — quickly indicated his dislike for the request.

“Until such time as I’m not under audit I would not be inclined to do that,” he said Wednesday.

When asked Thursday if he would direct the IRS to not disclose his returns, Trump said, "They’ll speak to my lawyers and they’ll speak to the attorney general.” 

As head of the department that includes the IRS, Mnuchin will face pressure from Trump and congressional Republicans to push back on Democrats’ request.

Key Republicans are critical of the request. The top Republican on the Ways and Means Committee, Rep. Kevin BradyKevin Patrick BradyOn The Money: Biden, Democratic leaders push for lame-duck coronavirus deal | Business groups shudder at Sanders as Labor secretary | Congress could pass retirement bill as soon as this year Top Democrat: Congress could pass retirement bill as soon as this year Momentum grows for bipartisan retirement bill in divided Congress MORE (R-Texas), argued in a letter to Mnuchin Wednesday that the request is “an abuse of the tax-writing committees’ statutory authority,” and he said it weakens Americans’ right to have their personal information kept private.

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Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyLoeffler to continue to self-isolate after conflicting COVID-19 test results Loeffler isolating after possible COVID-19 infection More GOP governors embrace mask mandates, but holdouts remain MORE (R-Iowa) said Thursday that courts have ruled that congressional requests for information need to have legitimate legislative purposes, and Democrats have fallen short on that front.

“They don’t have a purpose,” he said. “All they have are a lot of excuses.”

Mnuchin said at a Ways and Means Committee hearing last month that the Treasury Department would “follow the law and we will protect the president as we would protect any individual taxpayer under their rights.”

The Treasury Department has not commented on the tax returns request since it has been issued.

Trump has often publicly criticized members of his administration, but Mnuchin has avoided his wrath.

Mnuchin has been a fierce Trump loyalist and advocate for his agenda, supporting the president’s positions and controversial comments even when they differ from his own views.

The former Goldman Sachs banker and Hollywood producer served as Trump's campaign finance chairman and as an economic adviser before he was tapped to lead the Treasury Department.

Mnuchin, a business-friendly Republican, shared Trump’s support for cutting taxes and loosening bank regulations, if not his protectionist trade policy.

But while top White House officials say Mnuchin has expressed deep concerns about Trump’s tariffs behind closed doors, he’s supported the president's trade agenda in public and in negotiations with Chinese counterparts.

Mnuchin also proved his loyalty amid backlash to Trump’s response to violent white nationalist rallies in Charlottesville, Va., in 2017.

When the president faced an uproar for blaming “both sides” after deadly clashes between white nationalists and counterprotesters, Mnuchin, who is Jewish, insisted the president was not racist and did not sympathize with neo-Nazis.

His response was a far cry from that of a Jewish colleague, former National Economic Council Director Gary CohnGary David CohnOn The Money: Markets soar on Pfizer vaccine news | EU imposes tariffs on B of US goods over Boeing | Business groups applaud Biden's push for masks Former Trump economic aide Gary Cohn congratulates Biden The Hill's Morning Report - Sponsored by Facebook - Justice Barrett joins court; one week until Election Day MORE, who threatened to resign after Trump’s remarks.

Though Mnuchin is one of the few Cabinet officials to stay mainly on the president’s good side, Trump has fumed at the secretary for recommending Federal Reserve Chairman Jerome Powell. Trump has blamed Powell for hindering the U.S. economy by presiding over four interest rate hikes and has called the Fed the “greatest threat” to American economic growth.

Democrats who have criticized Mnuchin’s role in advancing Trump’s agenda say the IRS, not the Treasury secretary, should be handling the tax-return request.

“Secretary Mnuchin should have no involvement in responding to Chairman Neal’s request for President Trump’s tax returns,” Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenOn The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans The FCC is trying to govern content moderation: It doesn't have the authority MORE (D-Ore.) said in a statement Thursday. “Tax returns are held at the IRS and it is Commissioner Rettig’s job to fulfill the agency’s legal obligations. If Secretary Mnuchin inserts himself that would be blatant political interference.”

The statute in question mentions the Treasury secretary. But Neal’s office said in a “Frequently Asked Questions” document that the chairman sent the request to Rettig because the IRS typically handles requests under Section 6103 and the Treasury secretary has delegated the administration and enforcement of tax laws to the IRS.

Both Mnuchin and Rettig are scheduled to testify at congressional hearings next week, and lawmakers are likely to press them about their response to Democrats’ tax-return request.

Democrats and supporters of the request say there’s no good reason for the administration to not comply.

They are critical of Republicans’ privacy concerns, arguing that there’s a difference between requesting the president's tax returns and those of others. They also note that Neal’s request was limited to six years of documents and only requested the returns of eight of Trump’s business entities, and that Neal explained his request as necessary to see if the IRS is properly following its policy of auditing presidents.

“Congress overseeing the IRS and how they audit the president is at the heart of Congress’s oversight responsibilities,” said Seth Hanlon, a senior fellow at the Center for American Progress.

Democrats also took issue with Trump’s comments about not providing his returns while under audit, arguing that the statute under which they requested the tax returns doesn’t leave the matter up to him.

“With all due respect to the president, we did not ask him for the tax returns, we asked the commissioner of the IRS,” Rep. Dan KildeeDaniel (Dan) Timothy KildeeDemocrats to determine leaders after disappointing election Lawmakers fear voter backlash over failure to reach COVID-19 relief deal Democrats set to hold out for big police reform MORE (D-Mich.), a Ways and Means Committee member, told The Hill on Thursday.

Republican strategists predict that Mnuchin will get involved and that it will be an easy decision for him to reject Democrats’ request.

"You’ve never seen a Cabinet secretary at that level not fight for the administration,” said GOP strategist Ford O’Connell. He predicted that Mnuchin is likely to let the issue end up in the courts.

The pressure from conservatives to defend Trump will likely be intense.

Americans for Tax Reform President Grover Norquist said that Mnuchin should emphasize that tax data should be private information.

“It’s an outrageous request and he works for the president,” he said.