Supreme Tax Court

[Theme music fades out]

Sean Rameswaram: Support for this show comes from ServiceNow. AI is only as powerful as the platform it's built into, don't you know? That's why it's no surprise that more than 85% of the Fortune 500 use the ServiceNow AI platform. Didn't know that. While other platforms duct tape tools together, ServiceNow seamlessly unifies people, data, workflows, and AI, connecting every corner of your business. And with AI agents working together autonomously, anyone in any department can focus on the work that matters most. I've never met an AI agent. Learn how ServiceNow puts AI to work for people at servicenow.com.

Sean Rameswaram: Support for this show comes from Strawberry.me. Be honest. Are you happy with your job? Or are you stuck in one you've outgrown? Or never wanted in the first place? Sure, you can probably list the reasons for staying. But are they actually just excuses for not leaving? Let a career coach from Strawberry.me help you get unstuck. Discover the benefits of having a dedicated career coach in your corner. Go to strawberry.me slash unstuck to claim a special offer.

Sean Rameswaram: The Supreme Court wrapped up its 230th season today. Everyone was waiting to hear what the nine justices would say about President Trump's taxes, including us. Back in December of 2019, remember 2019? We previewed the tax cases with Andrea Bernstein from WNYC's Trump, Inc. podcast. Today, we're going to replay some of that detailed background Andrea provided before going to our pal Ian Millhiser to talk about the results. Here we go.

Sean Rameswaram: So there are two cases that stem from congressional subpoenas that Trump sued so as not to have his tax returns turned over. And those are Trump v. Mazars and Trump v. Deutsche Bank. Yes. And the third case is the Manhattan district attorney. And this case arises from an investigation into Trump's business that came from the Stormy Daniels case. A piece of it got sent to the Manhattan DA. The Manhattan DA began investigating, requested Trump's tax returns. And at that point, Trump sued the DA. So that's the third case, Trump v. Vance.

Sean Rameswaram: And I guess this story begins during the 2016 campaign when candidate Trump breaks with tradition and refuses to release his tax returns. How rich is this tradition of sharing your financial information? Every president in modern history has released his tax return to the public. Remind us why. Because it's important for people to understand whether the president is acting in his or her own interests or in the country's interests. The founders were so concerned about political corruption, and they felt that corruption could be as big a threat as a foreign army, that it could corrupt the democracy from within. So they put in all kinds of measures to bar political leaders from even the temptation of doing something wrong. And the release of the tax returns is in that tradition, that it's sort of it's a check. It's a control on having somebody who might be acting for a personal interest and not for the country's interest.

Sean Rameswaram: So what's the argument that President Trump makes in 2016 for not releasing them? He gives a bunch of reasons. He says, my business is so complicated, it's under audit. I'll release it after it's audited. But if I were finished with the audit, I would have an open mind to it. I would say that. But I don't want to do it during the audit. And really, no lawyer, even from the other side, they say often, not always. But when you're under audit, you don't have, you don't subject it to that. You get it done and then you release it.

Sean Rameswaram: And just to be clear here, candidate Clinton releases her tax returns and candidate Trump does not during the race. Correct. Then once he's elected president and hasn't released his tax returns, the argument is that, oh, well, the people voted for me. And so obviously they approve of my decision not to release my tax returns. So as president, he's got a Republican House, a Republican controlled Senate. Does the taxes issue kind of just go away for two years? Well, it kind of does because there's no one to make him.

Sean Rameswaram: We can now officially project that the Democrats will take control of the House. This is a very significant defeat for Mr. Trump, a historic accomplishment for the Democrats. Democrats getting subpoena power, the ability to investigate the president. And 2018 elections, Democrats take over in the House, and they make very clear that one of the things they want to do is oversight So they start doing investigations Round about the spring three committees start filing subpoenas for President Trump financial records from in one case his accountants and in another case his bankers

Sean Rameswaram: And they go to court, they request these subpoenas, and almost immediately, Trump brings in a team of lawyers and says, no, you cannot have these because you don't have a valid inquiry. And also you are trying to provide a law enforcement function, which you're not allowed to do. That's how two of the cases get to federal judges in New York and in the District of Columbia. And then once they're in those courts, they start working their way through and Trump starts losing. He loses at the federal court level. He loses at the circuit level. And that's how the case gets to the Supreme Court.

Sean Rameswaram: Okay, well, let's go through each of these cases one by one. There are two that originate from congressional investigations. The first is Trump v. Mazars. What's the story there? So in this case, the House is trying to get Trump's tax returns from his accountants. And the accountants seemed inclined to cooperate until the Trump family business intervened and said that couldn't happen, that there were various problems, including what they argued was a separation of powers.

Sean Rameswaram: And there was an argument in federal court and Trump lost that case and lost it very quickly. And almost simultaneously, the same House lawyers and the same Trump lawyers were in a courtroom in New York arguing the Deutsche Bank case. OK, and this is the second case the Supreme Court will hear. What's the situation in the Trump v. Deutsche Bank case? In this case, the House is looking at whether there was foreign influence in elections and whether there was some money laundering through banks and through business relationships that the Trumps might have had.

Sean Rameswaram: So they're saying we need to see the records. And among the records it's seeking from Deutsche Bank are Trump's tax returns. Now, in the Deutsche Bank case, the judge said at the end of the oral arguments to the Trumps, you don't have a case. You are wrong. There is nothing that bars these records from being turned over. At which point, the Trumps immediately appealed.

Sean Rameswaram: So the decision in those two cases, those two congressional cases, they've really tracked each other. They've been very close. The rulings have been similar. First, there was a federal judge that said, no, you're wrong to the Trumps. Then the district court said, no, you're wrong. So he loses the Deutsche Bank case at the district level and at the circuit level. And he loses the Mazar's case at the district level and the Second Circuit level. And each time he loses these cases, these are not namby-pamby decisions. The judges are saying the president is not king. That was an actual line in a decision. Congressional inquiries are legitimate. So these are very strongly worded decisions.

Sean Rameswaram: Okay, so two of these Supreme Court cases originated from the House, and they both tried to get the president's financial records in different ways, one going through the president's accountants and one going through his bank. What about the third case that originated with the Manhattan DA, Trump v. Vance? The third case is interesting because in the first two cases, Trump's lawyers argued Congress is violating its constitutionally authorized powers because it is trying to do what a prosecutor would do. The Vance case is so interesting because it's, in fact, a prosecutor. So they cannot be making that argument. So they are making a different argument. And the argument that they are making is that a president has absolute immunity from investigation even, not even prosecution, just investigation, so long as he or she is a sitting president, which has enormous implications, which did come out in the arguments in the Second Second Court of Appeals when one of the judges asked Trump's lawyer, he said, what about the Fifth Avenue example?

Sean Rameswaram: And what he's talking about is the president's comment that he could shoot somebody on Fifth Avenue and no one would complain. What's your view on the Fifth Avenue example? Local authorities couldn't investigate? They couldn't do anything about it? I think once a president is removed from office, any local authority, this is not a permanent immunity. Well, I'm talking about while in office. No. Nothing could be done. That's your position. That is correct. And what the judge is saying is, are you saying if the president shot someone on Fifth Avenue, he would be immune from investigation? And the Trump lawyer answer was yes so long as he a sitting president

Sean Rameswaram: As promised a break And then we going to talk about whether the president can just do whatever he wants He can't.

Sean Rameswaram: Support for today's show comes from Adio. What is Adio? Adio is an AI native customer relationship management system built specifically for the next era of companies. They say it's extremely powerful, adapts to your unique data structures and scales with any business model. According to Adio, Adio takes less than a minute to set up. And within seconds, you will have your email and calendars synced. You'll see all your relationships in a fully fledged platform, they say, all enriched with that actionable data. And they say you can build AI powered automations and use its research agent to tackle some of your most complex processes to seize so that you can focus on what matters. building your company. You can join industry leaders such as Flatfile, Replicate, Modal, and so much more. You can go to adio.com slash todayexplained to get 15% off your first year. That's A-T-T-I-O dot com slash todayexplained.

Sean Rameswaram: And the newest trends. If you like to save, but also like to stay in style, Burlington is your answer. And the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.

Sean Rameswaram: Ian, let's not waste anyone's time. What happened at the Supreme Court today with Trump's taxes? The president lost the case involving the prosecutorial probe, the state prosecutorial probe. So the law is the same there. But he got a pretty big victory in the other case, the Mazar's case. The court didn't say that he is immune from investigation, but it put some pretty strict new limits on the House's ability to investigate the president. And that means that the law moved very much in Trump's direction today.

Ian Millhiser: Interesting. OK, well, let's dig into it, starting with the congressional cases, as we did in the first half of the episode. What happened with the whole Mazar's case? What happened today? So up until today, the rule was that Congress has sweeping power to conduct almost any investigation that it wants to conduct. OK. What the Supreme Court said today is that that broad rule does not apply to the president of the United States. The president of the United States is special. And so it put all kinds of new limits on Congress's ability to investigate the president.

Ian Millhiser: And what that means in practice is that a lower court is going to have to hear this case all over again. I think it's likely that Congress is going to have to narrow its subpoenas. At the very least, they're going to have to look at what the new rules say and try to figure out what they can do with those new rules. And this litigation is going to go on and on and on for months and years, which means it's going to be months or years before anyone in the House sees Trump's financial records.

Ian Millhiser: Would anyone in the House still try or even have the authority to see his financial records after he's president? Well, after he steps down, it potentially gets easier. But at the same time, when he's no longer the president, the need for these records is less important. I mean one thing that they're probing here, for example, is whether or not the president of the United States has nefarious ties to Russia or to certain former Soviet businessmen. Right. And, you know, if it's the sitting president of the United States, you really care. If it's a former president, I mean, you still care if that's the case, but there's less of an immediate threat there. And so the need to see the records becomes less serious.

Ian Millhiser: What was the vote out of curiosity? So the vote here was really lopsided, which was surprising. It was in the Mazars case, it was seven to two. And the really surprising thing is that all four of the liberal justices joined the majority opinion. So not a partisan vote, so to speak.

Ian Millhiser: Yeah, I mean I can only speculate as to why the liberals voted the way that they did. It's possible that they decided it was better to throw in with Chief Justice Roberts who wrote the majority opinion than risk him having – deciding with the most conservative justices and writing an opinion that was even more favorable to Trump. I mean, one other thing that I'll note is that the lawyer for the House who argued this case did not do a good job at the oral argument. It was one of the worst oral argument performances, frankly, that I've seen before the Supreme Court. And, you know, on the margins, that can matter. Maybe some of the liberal justices were turned off by the fact that he didn't seem to have good answers to some of their questions.

Ian Millhiser: Now, in the other big decision, the Vance decision out of New York, there was also a 7-2 ruling, but kind of like 7-2 the other way. Is that fair? I think that mostly true There been a long line of decisions saying that the president not above the law For example in Clinton v Jones the Supreme Court said that the president can be sued by private citizens And the fact that he's president doesn't mean that he has full lawsuit immunity. The court has said that federal courts may – or federal prosecutors potentially can conduct criminal investigations into the president.

Ian Millhiser: This case asks whether state prosecutors may conduct criminal investigations into the president. And the answer to that is also yes. The president is still not above the law, still not immune to legal process. Does this mean that someone is going to at some point get to see his tax returns? The answer to that question is we don't know. So what's going on here is that Cyrus Vance, the Manhattan district attorney, subpoenaed Trump's accounting firm. They want a bunch of financial documents relating to Trump and also to Trump's companies.

Ian Millhiser: You know, they're probing whether not just Donald Trump personally, but the Trump organization, maybe other executives in the Trump organization have committed crimes. And so they want to see these financial documents so they can determine whether or not crimes have been committed. The implication of today's decision is just that that investigation is not going to be shut down in its entirety. Trump can't just say, I'm the president, na-na-na-na, I win. If the district attorney is able to overcome whatever new objections Trump may raise, then the district attorney will see these documents. They will be part of a grand jury investigation. Often those investigations are confidential, so the public may never see them. But this case at least holds open the possibility that someday we will know what's in those documents.

Ian Millhiser: How did President Trump take these decisions? I mean, he took it in very Trumpian form. You know, he sent out a tweet thread saying that, you know, some other presidents were super corrupt and, you know, suggesting that he was treated unfairly. This is about prosecutorial misconduct. We catch the other side spying on my campaign, the biggest political crime and scandal in U.S. history, and nothing happens. I doubt that he really understood what the court had done because it's not like, you know, this was a terrible day for him. But, you know, Donald Trump's going to Donald Trump. And so he complained about it.

Ian Millhiser: Chances are the president didn't read the opinions. I think that's right. He sent out a tweet thread reacting to them so quickly. I mean, I hadn't read the opinions yet and it's my job to do that. I think a lot of people heading into this particular session of the Supreme Court with such major cases on the line regarding abortion rights, Native American rights, President Trump's taxes, immigration, were really afraid that more recent Trump appointees would just rule completely in line with President Trump himself, who has obviously shown quite a disdain for the courts, for the legal apparatus of this country.

Ian Millhiser: Did people like Gorsuch and Kavanaugh surprise? So I think there are two factors in play here. One is Chief Justice Roberts. I think that Chief Justice Roberts recognizes that there has to be some daylight between the law and the preferences of the Republican president. And most of the decisions that he handed down that pleased liberals were very narrow. I mean I think his abortion decision is a one-off, good for this ride only. The very next abortion law that comes to him, he's going to uphold the attempt to restrict abortion. But I think that Roberts probably wanted to show that the court was engaged in something other than pure politics.

Ian Millhiser: I think that Gorsuch is the other factor. You know, Gorsuch has said that it's important to read statutes very literally. If you look at, for example, the LGBT rights case, Bostock, you had a law and if you just read the law, it was very clear that the language of that law pointed in a pro-LGBT direction. And, you know, to his credit, Gorsuch was able to say, look, like, this is what it says. And I said, you have to follow what it says. So I'm going to do what it says. So I don't know if I was flabbergasted that anything that happened this term, but I do think that the court showed that even though this is an extraordinarily conservative court, it does want to be engaged in something other than pure Republican policymaking.

Sean Rameswaram: Ian, thank you. What do Supreme Court reporters do when the Supreme Court is out of session? The answer is I'm taking next week off, assuming that there's no retirements. Congratulations. Thank you. Ian Millhiser covers the Supreme Court of the United States for Vox. I'm Sean Rameswaram for him. It's Today Explained.