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WASHINGTON — They’re promising Hawaii voters strong leadership in Washington, but most of Hawaii’s leading candidates for federal office are waiting for their opponents to make public their tax returns before they’ll do so themselves.
Tax fairness became a key issue in the 2012 presidential race, and former Massachusetts Gov. Mitt Romney came under intense pressure to release his tax returns. When he released his records in January, they showed he paid an effective tax rate of 13.9 percent on nearly $22 million in income in 2010.
The 13.9 percent rate that Romney paid was far lower than the 35 percent he would have had to pay on his income had it come from wages rather than dividends, profits and interest from investments. The rate discrepancy further fueled the debate over whether it’s right for U.S. tax policy to favor investment income over wage income.
Given that members of Congress are potentially in the position to shape tax policy, Civil Beat asked candidates to share their records so the public could determine how any potential policy changes might affect their representatives and senators. Candidates for federal office are required to make public financial disclosures and campaign finance reports, but there is no requirement for them to share their personal tax returns.
Many of the candidates promptly replied that they’d be happy to share their tax documents — but only if their opponents did so first.
Candidates in other states, including frontrunners in congressional races, have released their tax returns — and called upon their opponents for similar transparency.
In the race for Maryland’s Sixth Congressional District, for example, Democratic state Sen. Rob Garagiola released 10 years of his tax returns in January. Since then, the Garagiola campaign has pressed Democratic opponent John Delaney to do the same. Delaney has released information from his returns, but not the records themselves, according to the Baltimore Sun.
In California’s 52nd Congressional District race, Democrat Lori Saldana released her latest tax returns, and challenged opponents to do the same, according to the newspaper U-T San Diego.
In Illinois’ 12th Congressional District, the majority of candidates released their tax returns last month, according to the St. Louis Post-Dispatch.
Not so in Hawaii, where candidates appear to be playing a game of chicken when it comes to transparency.
Hawaii Senate Candidates
It looks like former Hawaii Gov. Lingle, former Congressman Case and Rep. Hirono have found something they can agree on: None of them want to be the first to share their tax returns.
“We’re prepared to give you the returns but we don’t want to be the only candidate to do so,” Lingle spokesman Lenny Klompus told Civil Beat in a phone interview on Wednesday.
Case, too, appeared willing to provide his returns — and followed up several times with questions about exactly what information Civil Beat was requesting. In response to a Feb. 16 email in which Civil Beat clarified that it wanted copies of his tax returns, rather than select line-item information from them, he suggested that we review financial disclosure information included with campaign filings instead. But on March 8, he made it clear that his decision will be contingent on what Lingle and Hirono decide to do.
“I am willing to provide the summary pages of my ’08-’10 tax returns if and when both Hirono and Lingle do the same,” Case wrote in an email. “If they refuse to do that, I am willing to provide my ‘effective tax rate’ together with total income and total federal tax paid for those three years if and when both Hirono and Lingle do the same.”
A spokeswoman for Hirono implied that financial disclosures that the congresswoman is already required to submit are sufficient.
“Every year Mazie publicly files a thorough and detailed Personal Financial Disclosure form with the House of Representatives,” wrote spokeswoman Susan Michels in an email. “Mazie also believes holding public office should always be about serving the public interest. That’s why earlier this year she also championed passage of the STOCK Act, to prevent anyone from using their position as a Member of Congress to do insider-trading on Wall Street.”
But tax returns would provide additional information not required in the financial disclosure forms that Michels cited. For example, those statements do not detail income or charitable donations.
John Carroll agreed to provide his tax returns almost immediately after receiving Civil Beat’s request. He put Civil Beat in touch with his accountant, but neither Carroll nor his accountant provided the documents before Civil Beat’s deadline.
1st Congressional District
In the 1st Congressional District race, former Republican Congressman Djou is battling incumbent Democratic Congresswoman Hanabusa.
The Hanabusa campaign said the congresswoman is reluctant to share her returns because she files jointly with her husband, who is a private citizen.
“We believe it would be unfair to him, as a private citizen with his own business interests, to make his finances public,” said campaign spokesman Richard Rapoza in an email. “As an elected official, Representative Hanabusa provides all financial disclosures as required by law and the rules of the United States House of Representatives, and pays all state and federal taxes due on those amounts.”
In a follow up conversation with Civil Beat, Rapoza said that Hanabusa believes that tax policy should be altered so that the wealthiest Americans “pay their fair share,” a message that’s consistent with reform that President Barack Obama has advocated.
“Given that concern about Mitt Romney’s tax rate… Colleen’s individual person income is her salary from Congress and a small partial retirement from the state from her time in the Senate,” Rapoza said. “She gets only regular income herself, so she doesn’t get that special tax treatment on her income.”
Rapoza said that voters should not worry about conflicts between Hanabusa’s personal interests and the ways in which she could influence the shaping of tax policy as a member of Congress.
“She is nowhere near the richest,” Rapoza said. “To the extent that people may think that members of Congress are going to be watching out or keeping tax rates low for personal benefit, that is absolutely not the case for her.”
Djou was deployed to Afghanistan as a member of the Army Reserve when Civil Beat made its initial request, and he returned to Hawaii earlier this month.
His campaign manager said in early February that “the campaign is not in a position to make his tax information available.” Active duty service members are banned from participating in campaign activities. The Djou campaign did not respond to Civil Beat’s March 7 request for his returns.
2nd Congressional District
In the 2nd Congressional District race, former Honolulu Mayor Hannemann and Honolulu City Council member Gabbard sounded a lot like Case and Lingle in explaining their reluctance to share their tax returns.
Gabbard told Civil Beat that she would be “happy to provide” the returns but only “if all my opponents (both Democrat and Republican) do the same.”
For Hannemann, the hesitation had something to do with his feeling that he had been burned before. When Civil Beat requested information about candidates’ fundraising events in January, Hannemann was one of the only candidates who was willing to disclose his roster of events.
“I am prepared to release info you need for 2008, 2009 (and) 2010, but this is what is gnawing at me: if I recall, only me, Ed Case and one other person complied (with the fundraising inquiry),” Hannemann said in a phone interview on Thursday. “You need to assure me that everyone you’re asking is providing it, and if they do that, I will provide the info. I just don’t want to rush out of the gate again.”
Three other candidates in the race — Del Castillo, Kiaaina and Marx — had far less time to consider the request than Hannemann and Gabbard because Civil Beat initially limited its request to the candidates who had raised the most money.
Del Castillo sent Civil Beat a summary of his tax returns that shows he paid an effective tax rate of about 11 percent in 2010. He did not provide complete tax returns, but said he intends to do so. Kiaaina immediately agreed to release her tax returns on Wednesday, but did not get them to Civil Beat in time for our deadline. Marx has not yet replied to Civil Beat’s Wednesday afternoon request.
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