The supreme court puts Trump’s tax returns in play

Donald Trump and his lawyers have routinely argued that the former president would be subjected to "irreparable harm" if his tax returns landed in unfriendly hands. The Supreme Court disagreed, and refused to block a subpoena that local prosecutors in New York had issued for the records.

This doesn't mean Trump's returns will suddenly appear online. They're going to a grand jury, and Manhattan District Attorney Cyrus Vance Jr, whose office issued — but had yet to enforce — the subpoena, presumably will be circumspect about who gets to see them.

Even so, a dam that Trump has spent decades fortifying around his finances and tax returns has been broken. And Vance's investigation appears to be broad enough to pose a serious criminal threat to the former president, his three eldest children and the Trump Organization.

Vance is investigating Trump for possible tax fraud and falsification of business records, according to appellate court filings. His office is also examining whether Trump inflated the value of his properties and other assets to secure funds from lenders and investors. Vance's investigation also involves the former president's payment of hush money to two women who allegedly had sexual encounters with him, a possibly less-threatening inquiry that may involve campaign finance violations and falsification of business records.

Vance has been seeking eight years of tax returns covering 2011 to 2019 from Trump's longtime accountants at Mazars USA. Last fall, the New York Times reported that Trump paid only $750 in federal income tax in 2016, the year he won the presidential election, and again in 2017, his first year in office. He managed to keep his payments so low by claiming massive business losses, maneuvers that also allowed him to pay no income tax at all in 10 of the previous 15 years.

Trump has spent decades inflating his wealth and his business acumen, which has also fed his desire to keep a lid on his financial records. Pride, as much as the legal perils he faces, has informed his efforts to keep Vance, other prosecutors and Congress from getting his tax returns. (Trump sued me for libel in 2006 for a biography I wrote, "TrumpNation," alleging that the book misrepresented his business record and understated his wealth. Trump lost the suit in 2011.) 

The Supreme Court, in a landmark ruling last summer involving Vance's efforts to get Trump's tax returns, ruled that presidents are not above the law. Trump's lawyers had argued that prosecutors like Vance needed to meet a heightened standard when seeking any president's personal papers. Chief Justice John Roberts, writing for the majority, disagreed, noting that presidents aren't immune from state criminal subpoenas and that Trump's argument "runs up against the 200 years of precedent establishing that Presidents, and their official communications, are subject to judicial process."

But the court said Trump was still free to contest specific legal concerns he had about various parts of Vance's investigation and sent the case back to a lower court for review. His lawyers promptly acted on that opening, claiming that Vance's subpoena, which included financial records apart from Trump's tax returns, was too sweeping and intrusive. Two courts rejected that assertion, and the legal battle returned to the Supreme Court, where it ended on Monday.

The court took nearly four months to rule on emergency filings from Vance's office seeking the right to enforce his subpoena, which he said hindered his investigation. Vance ultimately convinced the court that Trump "had multiple opportunities for review of his constitutional and state law claims, and at this juncture he provides no grounds for further delay."

On top of the legal challenges Trump is facing in New York and elsewhere, his business has debts hanging over it that may be hard to repay without selling off prized assets. Both these factors were undoubtedly front of mind for him when he contested the results of the 2020 election, a loss that removed the protections he had enjoyed as president.

The Supreme Court has now given Vance fodder to pursue a criminal investigation that entails something Trump has always feared: exposure.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement