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Public Statements

Grassley on the Disclosure of Tax Returns by Administration Officials

Statement

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Date:
Location: Unknown

On August 2, the Majority Leader decided that the valuable time of this body would be best employed by speculating on the contents of the tax returns of presidential candidate Gov. Mitt Romney. These remarks also touched upon the vetting process of the Finance Committee. As a senior member of the Finance Committee, as well as a former Chairman and Ranking Member of the Committee, I have come to familiarize my colleagues with the Committee's vetting process.

On Thursday, August 2, the Majority Leader exclaimed, "As we know, he has refused to release his tax returns. If a person coming before this body wanted to be a Cabinet officer, he couldn't be if he had the same refusal Mitt Romney does about tax returns."

This statement demonstrates a misunderstanding of the confirmation process for cabinet officials and the Finance Committee vetting process in particular.

The fact is, most prospective cabinet officers do not need to disclose their tax returns. Actually, no prospective cabinet officer is required to make their tax returns public in ordinary circumstances.

To my knowledge, the Finance Committee is the only committee that asks nominees to provide copies of tax returns. Specifically the Finance Committee asks that nominees provide copies of their last three Federal tax returns. The Committee may request further returns if it is warranted by the circumstances.

The Committee asks for this information for a few reasons. To begin with, many nominees referred to the Finance Committee, such as the Secretary of the Treasury and the Commissioner of the IRS, will be able to exercise significant influence over tax policy and administration. Additionally, the examination of a nominee's tax returns sheds light on the nominee's character.

Over the last few years, several high-flyers in the Obama administration have come up short when measured by their tax returns. Therefore, the vetting process utilized by the Finance Committee has received a lot of attention.

Only two cabinet officers and one position with the status of cabinet-rank are referred to the Finance Committee. These are the Secretaries of the Treasury and the Department of Health and Human Services, and the United States Trade Representative.

As I said before, to my knowledge the Finance Committee is the only Committee to requests copies of actual tax returns. This means that, not counting the vice president, there are 19 members of the cabinet who do not release their tax returns during the Senate confirmation process.

As I said, no cabinet official is required to make his or her tax returns public. This goes to the details of the Finance Committee's vetting process.

All nominees referred to the Committee are required to submit copies of their last three filed tax returns. These copies, along with other financial data, are shared with a very limited number of staff specially designated by the Chairman and Ranking Member.

While being reviewed, the returns themselves are kept under very tight control. Most staff for the Chairman and Ranking Member do not have access to the tax returns. Neither the Chairman nor Ranking Member may unilaterally release the tax returns or information obtained from them.

This means that even when I was Chairman, the Committee rules prohibited me from unilaterally releasing a nominee's tax returns or even making public that nominee's specific tax information.

When an issue is identified pertaining to a nominee's tax information, the Chairman and the Ranking Member jointly determine how to proceed. Information is only released under bipartisan agreement, and after consultation with the nominee.

For example, Secretary Geithner was given the opportunity to withdraw his nomination before the world learned of his failure to pay all of his taxes. He was also provided an opportunity to review the bipartisan memo that the Committee eventually released.

In sum, no nominees vetted by the Finance Committee need to make their tax returns public, and in the majority of cases no information is released. Additionally, the purpose of the vetting is not to damage the credibility of the nominee. I bet those seeking Governor Romney's tax returns are operating under a different standard.

I especially find it interesting that the Majority Leader compared Governor Romney to cabinet officials when speculating as to the contents of Governor Romney's returns. There seems to be an implication that a discovery of unsatisfied tax obligations would be problematic to the Leader.

While the Majority Leader may want to speculate as to whether or not Governor Romney has paid his taxes, there are nominees and officials of the current administration we know did not completely satisfy their tax obligations.

I will start this trip down memory lane with our current Treasury Secretary. Due in large part to his failure to pay self-employment taxes, irregularities in Mr. Geithner's returns added up to his owing a total of $48,268 in taxes and interest to the IRS. Those seeking a full accounting of the episode may read the bipartisan memorandum prepared by the Finance Committee, which is part of the record of his January 2009 nomination hearing. As I said, we don't need to speculate whether or not Secretary Geithner completely paid his taxes; we know he did not.

Secretary Kathleen Sebelius disclosed that in preparation for her confirmation she filed amended tax returns for 2005, 2006, and 2007. She voluntarily made this information public in the form of a letter to Chairman Baucus and me. This letter was printed in the record of her nomination hearing. The result of those amended returns was that she paid a total of $7,040 in additional tax and $878 in interest to the IRS.

Finally, I want to mention former Senator Tom Daschle, who was the administration's nominee to be Secretary of HHS for a brief period. Though Mr. Daschle withdrew his nomination before the Finance Committee held a hearing on his nomination, it was widely reported, including in the New York Times and the Los Angeles Times, that he failed to pay more than $128,000 in taxes in the three years prior to his nomination.

In mentioning Secretaries Geithner and Sebelius, and Mr. Daschle, I'm not suggesting anything beyond the reported facts of their circumstances or that their tax errors were intentional. I just wanted to remind the Majority Leader of these situations where it is not necessary to speculate on whether or not taxes were owed.

While I appreciate the Leader's newfound attention to the Finance Committees vetting process, I want to ensure everyone has a clear understanding of the Committee's process. I'd be happy to discuss the Committee's procedure with any interested colleague. I am sure Ranking Member Hatch and his staff would also be happy to discuss the process with anyone who is interested.


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