In 2012, Mitt Romney in the end released his tax returns, despite the fact that they were deeply embarrassing. Those returns showed that Romney paid tax at a lower rate than do many middle class Americans, by virtue of the “carried interest” tax loophole on which Romney and other private equity chieftains rely, and further suggested a very aggressive approach to the valuation of private equity partnership interests sold to his retirement accounts. Yet Mr. Romney did the right thing by following tradition, because by doing so he signaled that he was leaving behind his career as a businessman, and rededicating himself to a future as a politician and statesman. The morals of the marketplace are insufficient here; instead, we require complete financial transparency in the men and women who aspire to represent our collective interests.
I confess to having played the parlor game as well. My own theory relied on the fact that a large fraction of Trump’s income comes from licensing his personal brand, not from real estate projects that he owns. I speculated that Mr. Trump might have transferred the foreign rights to his own brand to a tax haven company, and set up a complex structure to exploit those intangible assets while paying minimal taxes, just as Google or other high-tech firms have done. But on reflection, who other than a handful of tax specialists would understand, much less care, that Mr. Trump employed a “Double Irish Dutch Sandwich” tax structure to minimize his tax liabilities?