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Why reporters should look at local candidates’ taxes

October 6, 2016

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Photo "Tax Returns" by Amy Wu

Ahh taxes. Most of us dread tax season, but for journalists it is critical to get chummy with taxes right now, in the heat of the election. And I mean local journalists, who should request tax returns from their state, county and municipal candidates. Taxes are a window into the financial souls of local elected officials, and a gauge of their transparency level.

Look no further than this presidential race.

Taxes have taken the limelight with GOP candidate Donald Trump stubbornly refusing to release his taxes (“When the audit’s complete, I’ll do it…” he said during the first presidential debate on Sept. 26).

But nowhere does the IRS say that an audit prohibits disclosing taxes.

Now that The New York Times has reported there may have been as many as 18 years in which Trump wasn’t required to pay federal taxes, the topic is even hotter.

Local politicians are jumping on the tax return bandwagon. In Monterey County, Calif., my home county, Republican candidate Casey Lucius–running for Congressional District 20–beat challenger Democrat Jimmy Panetta (son of former CIA director Leon Panetta) to releasing taxes.

“I call on my opponent to step up and do the same,” Lucius wrote in a news release. Ten days later, Panetta did.

Taxes are a big deal when it comes to writing about political candidates locally, state-wide and nationally. Although candidates at all levels aren’t required to share their tax returns, it says a lot if they do or don’t. And if they do, tax returns are the best way to measure a person’s financial health based on their annual income.

Tax returns tell us their status: Are they single, married or filing jointly? What other businesses do they have? They tell us how much the candidate paid in taxes and the tax rate, deductions and tax credits claimed, real estate taxes, wins and losses when it comes to investments, money owned and potential money offshore. Returns also reveal what a candidate cares about and potential conflicts of interest.

Five gems to look for in a tax return

Status: As a Fortune magazine article stated, returns reveal the candidate’s financial constellation. Who are the candidate’s financial dependents—spouse, children, other relatives?

IRAs: How much does a candidate have parked in his retirement nest? This can be a window into how fiscally conservative or not he is based on his investments. Mitt Romney, the 2012 Republican nominee, had somewhere between $20.7 million and $101.6 million in his IRA.

Charities: Who is the candidate’s donating to? On the surface this looks like a window into their passions and causes, but on another level it’s a chance to dig deeper and see if there are connections between the heads and board members of these organizations and the candidate. As the Sunlight Foundation rightfully notes from tax returns, “we learn their [candidates] values and priorities from learning which charities they support.”

Businesses: A return offers the meat and potatoes of a candidate’s businesses and business partners, along with any debt accrued or financial transactions.

Deductions: How much is the candidate taking in tax deductions?

Reporter’s Takeaways

• Always ask: Although local and statewide candidates aren’t required to disclose their tax returns, don’t shy away from asking your local candidates—city and state-wide—for their tax returns.

• Look for the keys in the filings: earnings, deductions, pensions and annuities and gifts to charities

• Dig deeper: Information on a tax return can be the string to more potential stories, whether it be a deeper dive into a candidate’s business dealings or the roots of his charitable giving.

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