Trump tax returns: Judge blocks California law

Sept. 19, 2019 4:18 PM PT

SACRAMENTO — A federal judge ordered a temporary injunction Thursday against California’s first-in-the-nation law requiring candidates to disclose their tax returns for a spot on the presidential primary ballot, an early victory for President Trump but a decision that will undoubtedly be appealed by state officials.

U.S. District Judge Morrison C. England Jr. said he would issue a final ruling by the end of the month but took the unusual step of issuing the tentative order from the bench. He said there would be “irreparable harm without temporary relief” for Trump and other candidates from the law signed by Gov. Gavin Newsom in July.

England spent much of the court proceeding on the question of whether a long-standing federal financial disclosure law preempts any additional rules that a state could impose. The federal law, known as the Ethics in Government Act, or EIGA, was originally passed in 1978 and applies to a range of top federal officials. Trump has filed the required annual report, which provides an overview of his finances, most recently in May.

“Do we even need to get here if EIGA preempts” the new California law? England asked attorneys for the state. “Is that it?”

The hearing in a Sacramento courtroom consolidated arguments made in five separate lawsuits filed since Senate Bill 27 was signed into law. Attorneys on both sides noted that timing is tight on the legal challenge: Under provisions of SB 27, candidates must submit tax returns no later than Nov. 26 to be eligible for the March 3 primary.

Roque “Rocky” De La Fuente, who filed one of the lawsuits and was a minor-party presidential candidate in 2016 after failing to win support in the Democratic Party, said he supports some limited, voluntary tax return disclosure.

“I don’t think it should be mandated by the state,” De La Fuente told reporters outside the courtroom.

California Secretary of State Alex Padilla, who as chief elections officer was named a defendant in the lawsuits, said he would wait to see the written ruling before deciding whether to appeal.

“We remain firm in our belief that SB 27 is constitutional and provides invaluable transparency for voters as they decide who will hold the most powerful office in the United States,” Padilla said in a statement.

Jesse Melgar, a spokesman for the governor, said Newsom believes the California law seeks to ensure full transparency.

“These are extraordinary times,” Melgar said. “States have a legal and moral duty to restore public confidence in government and ensure leaders seeking the highest offices meet minimal standards.”

Trump sued in August to block implementation of SB 27. His attorneys told the judge that the California law would unfairly force the president to give up his right of privacy to keep his tax returns confidential in order to participate in the March 2 statewide primary.

California Deputy Atty. Gen. Peter Chang told the court that states already have their own unique primary election rules and that SB 27 affects not only the chief executive of the nation but also that of California. “This is what the voters need to elect their executives,” he said.

But Thomas McCarthy, an attorney representing the president, told the judge the U.S. Constitution sets out rules for running for the nation’s highest office that are “fixed and unalterable” by individual states. He said California voters may have an interest in a presidential candidate’s tax returns, but the state “cannot try to inform” voters beyond the basic information.

England seemed to suggest there could be reasons to rein in electoral rules that leave presidential candidates scrambling to provide different information in different states.

“Wouldn’t that create a hodgepodge of laws around the country?” he asked.

The California law requires any candidate for president or governor who seeks a spot on the statewide primary ballot to give state officials copies of Internal Revenue Service tax forms from the last five years of filings. After personal financial information is redacted, copies of those documents would be made available for public inspection.

The law does not apply to any candidates seeking office other than president or governor, including those vying for seats in the California Legislature or Congress, and it would have no effect on the November general election. In practical terms, should Trump be kept off the primary ballot, he would still have the opportunity to receive votes for president in the fall as the Republican Party nominee.

State Sen. Mike McGuire (D-Healdsburg), the author of SB 27, said Thursday that his bill was nothing more than a ballot access requirement similar to those already in existence.

“I think the judge got this one wrong,” he said. “Transparency is the foundation of accountability. This issue of releasing tax returns is bigger than any one candidate or any one president.”

California elections officials confirmed Thursday that no presidential candidates have submitted tax returns yet to comply with the new law. Though some Democratic presidential candidates have made portions of their tax returns public, the five-year standard under SB 27 would require additional disclosure for many of those who hope to have their name on the California ballot.

Thursday’s face-off in federal court capped a tumultuous week for the relationship between Trump and California. The president’s two-day visit to the state focused on private campaign fundraisers but included a trip to the U.S.-Mexico border and a threat to sanction San Francisco over what he called “tremendous pollution” brought on from the city’s homelessness problems.

Trump is only the second president since 1976 to refuse requests for public review of his tax returns. Though the practice became routine in most elections, it has also been voluntary. The new law also applies to candidates for governor, elections in which tax disclosure has been far less consistent. Newsom, however, allowed reporters to inspect five years of his tax returns in 2017.

California’s new election law is just one fight being waged by the president to keep his tax returns out of the public eye. On Thursday, his attorneys also sued to block an effort by the Manhattan district attorney to obtain his tax returns by subpoena.

But only the California battle has direct consequences for the 2020 presidential campaign. In a court filing last week, Trump’s attorneys said the state law goes far beyond the “procedural” election requirements that states can impose. They also insisted the law treats candidates differently, in that it applies only to those who belong to one of the six political parties that have qualified under California law for official recognition.

Those parties are the only ones that will participate in the primary because the election is designed to allow the selection of national party nominees. Any candidate wishing to mount an independent or write-in presidential campaign wouldn’t appear on the ballot until November.

Attorneys representing Newsom and Padilla said the state law doesn’t create an insurmountable hurdle to keep a candidate off California’s ballot, arguing that the only reason a candidate can’t meet the standard is because he or she simply doesn’t want to.

Chang argued in court that privacy was not an issue for a national candidate.

“When they choose to run for president, they insert themselves into the public discourse,” he said.

In addition to the five lawsuits considered Thursday, there are three other legal challenges to the California election law. Two additional lawsuits have been filed in Los Angeles and San Diego. A third challenge was filed by the California Republican Party in the state Supreme Court, asserting that the new statute conflicts with existing election law.

But the effort by Trump is the highest-profile of the group.

Beyond the specter of a sitting president being left off the primary ballot in the most populous state, Republicans have said there would be significant harm to the party if the new law is allowed to take effect. They believe that without Trump on the ballot, millions of GOP voters would have less incentive to participate in the March primary and party candidates could come up short in down-ticket races. Under California’s unique primary election rules, only the top two vote-getters in legislative and congressional races move on to the November general election — even if they are from the same party. Democrats, GOP officials have argued, could easily take both of those spots in key races if Republican enthusiasm is diminished by a primary in which Trump must sit on the sidelines.

But England, appointed to the federal bench by President George W. Bush in 2002, pushed back several times Thursday against attorneys representing California Republicans who cited potential harm to their candidates, insisting the issues raised cut across party lines.

“I don’t think this is just a Republican argument,” he said.

Trump received almost 1.7 million votes in the June 2016 statewide presidential primary, far outpacing his GOP rivals.

Supporters of the California law have said mandatory tax document disclosure is long overdue, but few believe it would have gained traction without the election of Trump. De La Fuente, who said he intends to run as a Republican in the upcoming presidential election, said the president made a mistake in dodging the issue in 2016.

“I thought he made a mistake by not disclosing, but I would assume that he’s got something to hide,” he said.