Donald Trump’s tax returns explained: why won’t he release them, and are they hiding a ‘bombshell’?

Donald Trump is the first major-party US presidential nominee since Gerald Ford in 1976 not to make his tax returns public.

“Nothing is private anymore: tax returns, medical records, the public expects to know all of these things from political candidates," says elections expert Bill Schneider, a veteran CNN political analyst and visiting professor at UCLA. "It’s not like the mid-20th Century, when Roosevelt was able to hide a serious illness from most Americans.”

Yet Trump appears to be perfectly comfortable flouting several electoral customs, and his campaign has made it clear, despite earlier assurances, that he is unlikely to release his tax returns before voters go to the polls on 8 November.

Why should Trump release his tax returns?

It’s a tradition. For the past 40 years, the release of a nominee’s tax returns has represented the minimum standard for transparency demanded of presidential candidates.

The convention has its origins in 1952, when then-congressman Richard Nixon was running to be Dwight Eisenhower’s vice president. After it emerged that Nixon had been maintaining his own secret campaign fund, the controversy forced Eisenhower and Democratic rival Adlai Stevenson to reassure voters of their probity by divulging details of their own taxes.

Four years ago, GOP nominee Mitt Romney was widely criticised for releasing a mere two years’ worth of tax information relating to his vast personal fortune. Romney and his 2012 running mate, Paul Ryan – now the GOP House Speaker – have both called on Trump to make his tax returns public. “I released mine. I think he should release his,” Ryan said recently.

Even Trump’s own running mate, Indiana Governor Mike Pence, has released 10 years of tax returns. Pence and his wife earned a little over $113,000 in adjusted gross income last year, mostly from his governor’s salary.

So why hasn’t Trump done it yet?

Ask Trump, and he’ll tell you that it’s because he’s being still audited by the Internal Revenue Service (IRS). He has yet to offer documentary proof that this is the case, in the form of the IRS letter that would have been sent to inform him of such an audit.

Instead, the Trump campaign released a letter from the property mogul’s own tax lawyers, asserting that his returns had been under “continuous examination” by the IRS “since 2002”.

Assuming this is true – and, to be fair, it would not be unusual for a man of Trump’s alleged wealth – there is still no legal reason for his lack of transparency. Audit or not, the Republican nominee would be well within his rights to release the returns publicly anyway.

The far more likely reason for his reticence is that the tax returns contain something potentially politically damaging – more damaging, in fact, than his continued refusal to release them. Romney, de facto leader of the GOP’s #NeverTrump faction, said in February that he believed the property mogul’s returns contained a “bombshell”.

This month, Trump’s eldest son, Donald Jr, implied as much in an interview with the Pittsburgh Tribune-Review, when he said that releasing his father’s “12,000-page” tax return would make “financial auditors out of every person in the country, asking questions that would detract from his main message."

What might this ‘bombshell’ be?

Expert observers have several theories, the most obvious of which would be that Trump pays an extremely low tax rate for such a wealthy man. That would be an embarrassing revelation for any conventional presidential candidate, and it could alienate a few Trump supporters if they feel duped by his blue-collar-billionaire schtick.

But then again, Trump has often boasted about his ability to play the system to his advantage; would he really be ashamed of his perfectly legal tax avoidance, however gross? His campaign could even spin it as further evidence of his business acumen.

Americans aren’t naturally suspicious of wealth, explains Schneider – far from it. But they do want to know that a candidate has been open, honest and fair in the acquisition and application of his or her wealth. Trump’s refusal to release his returns, he says, “creates the impression that he has something to hide.”

Given recent revelations about the Trump Foundation, it’s possible that the tax returns could prove just how little money The Donald has personally donated to charity. They might also point to foreign financial entanglements and overseas investments, which could suggest conflicts of interest and run counter to the candidate’s promise to “Make America Great Again” by bringing business back to the US.

But perhaps the most interesting theory of all is the most counter-intuitive: do Donald Trump’s tax returns show that he’s not really as wealthy as he claims? Trump’s brand relies on him being perceived as a multi-billionaire – and he has shown himself to be particularly sensitive about any claims to the contrary.

Has Hillary Clinton released her tax returns?

Yes. The Democratic nominee and her husband, former President Bill Clinton, have released their tax returns going back to the 1970s, and all their returns from 1992 onwards are available to view online. The couple released their 2015 return last month, showing they paid an effective federal tax rate of 34 per cent last year, on an income of $10.6m.

If everyone is so anxious to see Trump’s tax returns, why haven’t they leaked yet?

The press is very keen to get a look at Trump’s tax returns, and so are the public – including many of his own supporters. In the age of Anonymous and Wikileaks, it may seem remarkable that none of the tens of thousands of federal employees who technically have access to the documents have decided to leak them to the internet or the media.

For all its vast bureaucracy, however, the IRS could quickly identify the culprit – and the leak of confidential tax records is a felony punishable by up to five years in jail and a $5,000 fine. Worth it?