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The Real Lesson of Romney’s Tax Returns

The overly-anticipated release of Mitt Romney’s tax returns raises a variety of questions which the country would do well to debate.

To begin with, why do candidates release tax returns? After all, it isn’t legally required – not for presidential candidates nor for sitting presidents. Tax returns are a private matter, and the IRS is barred from making them public. Legally, presidential candidates, sitting presidents, and representatives need file only a financial disclosure report about their assets.

This more restricted glance into an officeholder’s financial state is more justifiable, serving to prevent conflicts of interest and abuses of power for financial gain. Granted, presidents have for several decades now released tax returns as well, but they tend to put their money in blind trusts (which manage one’s investments on one’s behalf), the specific financial dealings of which are not covered in the tax returns, so we don’t learn much else.

Establishing a blind trust, incidentally, is a way of avoiding the potential conflicts of interest that lay behind the recent congressional insider trading scandal. But more fundamentally, our concerns really serve as a reminder that the possibility of abuse of power grows proportionally with the size of government, and this is surely a case for restricting the purview of intervention in the economy as much as responsibly possible.

This still leaves us with our question, though: why do candidates and presidents release their tax returns? Voters’ prurience, David Brooks rightly answers, as well as other unsavory motivations, such as envy and a broader war on privacy. Ed Morrissey agrees, and rightly wonders why conservatives – traditionally so mistrustful of the IRS and like intrusion – are so insistent on seeing candidates’ filings.

Rick Perry, having released his own returns, called on Romney to follow suit, so that the ”people of this country can see how you [Romney] made your money. I think that’s a fair thing.” The problem is we already have a good idea of how Romney made his money, as well as how much he has. The only thing that matters is that it was not illegal, and that much we can presume.

So what else is there to discover? Sure, Romney’s tax rate seems pretty low, but as Jim Pethokoukis has noted, it’s much higher than it seems and it’s also still well above average. And if one wants to infer that it’s an example of expensive accounting, then let it serve as a case for fundamental tax reform. Moreover, our aim in any case should be to reduce taxation as much as possible, not to look for rationales to get ordinary taxpayers to pay more. (By contrast, there is much to be said for everyone contributing something.)

As for Perry’s other argument – that the returns should be released sooner rather than later to confirm the GOP does not nominate a ”flawed candidate” and realize too late – again, this would not be an issue were the party to oppose the release of tax returns on principle.

So, a good argument in favor of full release has yet to be made, and until it is, one can only conclude that, honestly, this tradition only feeds our baser yearnings and insalubrious prejudices, and hence, should be discarded.

But the take-away is more profound than that, because there is one thing we did discover that was interesting: how much Romney gives to charity. That is to say, more than the millions he paid in taxes, and more than any other presidential candidate or recent president (as far as we can tell). Now, of course he also has the unrivalled means to do so, but proportionally he gives far more than any of the others (as, incidentally, do conservatives over liberals, on average). It is not appropriate to delineate here precisely those sums, because giving should be a private affair – as Maimonides rules, anonymous charity is preferable. Moreover, one can and should also give of one’s time, and tax returns cannot account for that, nor for post-tax charity.

What the Romney tax return does show is a family who gives generously and exemplifies communal devotion, and provides a model which favors voluntary charity over enforced taxation, a model to which we and our tax code should aspire. Contrary to Perry’s suggestion, what was interesting was not where the money came from, but where it went, and grass roots Republicans have done a decent man a disservice by forcing him to make his generosity public. Hopefully, we can all learn from this episode that we should give more and expose less.



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