Democrats debating to expand inquiry into Trump's business tax returns

Congressional Democrats are debating whether to expand the scope of their inquiry into President Donald Trump's taxes to include his business tax returns along with his personal returns, a risky step seen by some as crucial to effective oversight.

The debate has intensified, aides and lawmakers said, since last week's testimony by former Trump personal attorney Michael Cohen, who alleged to lawmakers that Trump altered his business asset values and slashed employee salaries to lower his taxes. The testimony suggested that investigators in the House of Representatives will need both his personal and business returns to fully assess Trump's compliance with tax laws and understand the network of businesses he owns, lawmakers said.

The White House declined to comment on Thursday. House Democrats have spent months laying the groundwork for an unprecedented request to Treasury Secretary Steven Mnuchin for Trump's personal tax filings.

Adding Trump's business returns could complicate an already legally delicate effort, aides and lawmakers said. Trump owns more than 550 companies and business entities, including the Trump Organization, his financial disclosure reports show. "There's conflicting advice on this," said Representative Richard Neal, chairman of the House of Representatives Ways and Means Committee and the only House lawmaker authorized by law to ask Mnuchin for Trump's returns.

"Tax policy is pretty complicated. There are times when individual returns can instruct you. Other times, you might seek a business return," Neal told Reuters in an interview. "It has to conform to the principle of a pretty narrow law." Neal is trying to formulate his request to Mnuchin so that it can withstand a likely court fight with Trump, who has refused to release his returns, defying decades of presidential practice. Unlike predecessors, Trump has also retained extensive business interests while serving as president, raising questions about conflicts of interest.

Interest in Trump's business returns is coming from at least four other House panels, including Oversight and Judiciary, according to aides and lawmakers. House Oversight wants to depose long-time Trump tax attorney Sheri Dillon, who likely has a deep understanding of Trump's tax returns. Committee officials said this week that no final decision has been made on whether to pursue the business returns in the initial request.

'A LOT OF DOORS'

Cohen's testimony "opened a lot of doors for investigatory bodies," Democratic Representative Alexandria Ocasio-Cortez, a member of the House Oversight Committee, told Reuters.

"It's about comparing his financial statements with his tax reports. What Cohen named particularly were the Trump Organization taxes," she said. Democrats, who won control of the House in the November 2018 U.S. elections, say Trump's personal returns would reveal whether he has complied with U.S. tax laws and any IRS audits, as well as his effective tax rate, business and investment income and charitable contributions.

But Democrats could blunder by focusing solely on Trump's personal returns if their aim is to identify conflicts of interest between his sprawling business investments and the policies he advocates from the Oval Office, tax experts say. "Personal returns alone fall short," said Steve Rosenthal, a senior fellow at the nonpartisan Tax Policy Center, a think tank in Washington.

Success against legal resistance to disclosure by Trump would greatly depend on the ability of Democrats to demonstrate a legitimate legislative purpose for their request. Rosenthal said including business returns would strengthen the House argument because the documents are geared strongly to legitimate oversight questions such as conflicts of interest.

But House Democrats are talking about simplifying their request by targeting a limited number of Trump companies tied to investments of interest, rather than the entire business network, and possibly making further requests later. "It's going to be a combination of both personal and business because he goes back and forth between both. To get the full picture, I don't think you can just pick one or the other," said Representative Gerry Connolly, an Oversight member. 

(With inputs from agencies.)