Do Tax Records Matter in a Presidential Race?
- August 16, 2016
- Posted by: [email protected]
- Category: Blog
If you, like our tax experts at Escobar & Associates, have been paying attention at all to the presidential race, you probably have heard that Hillary Clinton recently released her tax records and Donald Trump has decided not to do so, yet. Why is this such a big deal? Most Americans would consider a request to disclose tax returns and income information to friends, co-workers, and even family uncalled for and rude. So, why do we as voters deem it necessary of our presidential candidates? What information do these documents really provide voters and does this information really help Americans elect the best candidate to the top political position in our country?
The practice of disclosing tax records is purely voluntary, but has been done by most presidential and vice presidential candidates for about 40 years. According to the Christian Science Monitor, this practice started with Richard Nixon. Before Watergate, President Nixon was already in hot water over how little he paid in taxes. The Internal Revenue Service (IRS) determined that Nixon owed $465,000 in back taxes. After President Nixon resigned, President Gerald Ford was tasked with regaining the American people’s trust in the government. In 1976, when he was running for reelection, Ford, released his 1975 tax return to the public. President Jimmy Carter continued the new tradition and so has every president since. Many vice presidential and top US politicians do so as well, to this day. When Hillary Clinton released her records, so did Democratic VP candidate, Tim Kaine. So far, neither Trump nor the Republican VP candidate, Governor Pence have done so. Governor Pence has not released records as Governor of Indiana either.
It is important to remember that the US tax system is mostly a voluntary system. The majority of US taxpayers will not be audited by the IRS, so we are on the good faith system when it comes to paying taxes. If we, as American taxpayers, view the President as not following tax laws and paying what they should, we may feel less inclined to remain honest when tax season rolls around, with dire consequences if it were to come to the attention of the IRS. The practice of tax record disclosure by politicians and presidential candidates is a way to gain the trust of the American people. According to the New York Times, tax records provide information about sources of income, effective tax rates, and charitable donations of the candidates. Voters are able to gain knowledge about a candidate’s background, experience, business interests, and may find potential conflicts of interest. In the 2012 presidential election, President Obama used the low tax rate Mitt Romney paid on his tax return as a tool to promote tax reform for the wealthy. While tax returns may provide information to the voters, they are also used as a political tool in the campaign. Donald Trump has repeatedly said, as most Americans do, that his tax returns and tax rate are none of your business. Mr. Trump, as well as Mrs. Clinton filed financial disclosure paperwork as part of their presidential campaigns. The American people already have insight into the financials of both candidates with this disclosure. Is the tax return necessary? Does it build trust or make one candidate better than the other? We will leave that up to you.
The tax experts at Escobar & Associates are here year round to answer your tax questions and help you prepare your business and personal finances to keep you tax compliant and thriving, no matter what the politicians are up to. From basic personal and business bookkeeping services all the way through to providing support with the IRS, we can help steer you to a healthy financial future.