Next time, don't promise to release your tax returns

For a team that's run a smooth and successful operation all year, Fred Hubbell's campaign was surprisingly inept at managing the controversy over whether the candidate would release his tax returns.

VAGUE PROMISES

Iowa law doesn't require candidates or office-holders to release personal tax information, and past candidates for governor have not handled the matter in any consistent way. Bob Ray and Chet Culver released summary data from one year of tax returns when running for governor. Terry Branstad allowed reporters to look at three years of tax returns before his first bid for the state's top job in 1982, but only one year's returns when he came out of retirement in 2010. The last Democratic nominee, Jack Hatch, likewise released returns for the year prior to his 2014 campaign. Tom Vilsack set the highest standard, releasing five years of tax filings when he ran for governor in 1998.

I prefer the Vilsack approach, but no one can force a candidate to provide that level of transparency. If Hubbell intended to disclose only a summary of last year's taxes while keeping sources of income and other financial details private, he could have made that clear months ago.

Instead, representatives of the campaign continually led journalists to believe they would have access to some tax returns. The Cedar Rapids Gazette reported in May that Hubbell "said he would be willing to disclose his tax returns and make other pertinent financial disclosures if other Democrats and Reynolds do as well." Barbara Rodriguez asked about Hubbell's taxes in early June and again the following month, hearing back in mid-July that the release would happen "in a timely manner."

Governor Kim Reynolds upped the ante by putting ten years of tax filings on Dropbox in early August. In response, the Hubbell campaign again assured the media the candidate's tax returns would be "available soon."

“Governor Reynolds’ ‘commitment’ to transparency holds little weight when on the same day it comes to light her Medicaid advisor was forced out for doing his job and voicing faults in her disastrous privatization of Medicaid,” Remi Yamamoto, communications director for the Hubbell campaign, said in a written statement. “As we’ve said before, Fred will make his tax returns available soon, but more importantly why does Governor Reynolds’ commitment to transparency not extend to the program overseeing the lives of 600,000 Iowans?”

Fair enough. Meanwhile, Republicans set up a website harping on Hubbell's failure to release his tax returns. The hypocrisy was palpable: Reynolds and state party leaders haven't said a peep as President Donald Trump refused to disclose any tax information despite a history of shady business dealings and connections to foreign financial institutions.

In any event, Hubbell said on August 14, "We’re going to release them as soon as we have them available." According to the Cedar Rapids Gazette, "His staff said Hubbell has filed an extension, but his taxes are being 'fast-tracked to get them done as soon as possible.'"

LIMITED INFORMATION

Sometime during the last two weeks, tax preparers completed the Hubbell returns. But the campaign didn't allow the press to review those documents in full. An August 29 press release contained some salient numbers:

Today, Fred Hubbell, Democratic nominee for governor, makes public one year of personal and charitable foundation tax information for 2017. As governor, Fred will also release his personal tax information for every year in office.

This availability meets past precedent of former Governor Bob Ray and then candidate in 2006 and former Governor Chet Culver who each made publicly available one year of personal tax information.

The Fred and Charlotte Hubbell Charitable Foundation is a private charitable foundation created in 1997 dedicated to help improve quality of life through community investment.

Fred and Charlotte’s largest charitable donation in 2017 was to create a permanent endowment at the Community Foundation of Greater Des Moines to fund scholarships and paid internships at Simpson College.

Tax documents will be made available to view Thursday, August 30, from 1-4pm. Media interested in viewing must RSVP to remi@fredhubbell.com for further details.

Key Details From 2017 Tax Information

Total Charitable Giving (Personal and Charitable Foundation): $1,275,576

2017

Federal
Federal Adjusted Gross Income: $3,000,973
Amount and Percentage Given To Charity: $816,926 (27.2% of Adjusted Gross Income)
Taxable Income: $1,600,246
Tax Rate (computed from Taxable Income): 25.3%

Iowa State
Taxable Income: $1,878,393
Tax Rate (computed from Taxable Income): 6.3%

Fred And Charlotte Hubbell Charitable Foundation
Total 2017 Giving: $458,650

I went to the appointed place and time and looked over three-page summaries of the candidate's state and federal returns, along with the 990 form for the charitable foundation. Following Branstad's practice, Hubbell's representatives did not allow reporters to take pictures of the documents or remove any papers from the room.

Although those documents contained more numbers than the press release, and campaign adviser Jeff Link was on hand to answer questions, specifics were lacking. For instance, Hubbell (who is retired) reported wages or salaries of $502,175. According to Link, most of that income consisted of director's fees from corporate boards. Which boards? Link didn't say, but he noted that Hubbell stepped down from several such boards in 2017, remaining a member of charitable boards for which he is not compensated. David Pitt reported for the Associated Press, "Campaign financial disclosure forms filed by Hubbell in April indicate he was paid for serving on the board of Voya Financial Services, a retirement savings firm and Macerich Inc., a real estate company."

Journalists also were not able to see which investments produced $1,296,103 in capital gains, which stocks or pension funds provided $529,829 in qualified dividends, or which holdings generated other business income of $445,251. According to Link, some of the last category of income came from real estate investments. Where those properties are located is not clear.

The summary information from the federal tax return showed $1,400,727 in itemized deductions. The largest share consisted of charitable donations totaling $816,926: $224,546 in gifts by cash or check and $592,380 by other means, such as contributions of stock. (Disclosure: I serve with Fred and Charlotte Hubbell on the Iowa advisory council for the Chicago-based Environmental Law & Policy Center. From 2007 through 2016 I was a board member of the Iowa Environmental Council, for which the Hubbells have been large benefactors, and I currently lead the board of 1000 Friends of Iowa, to which the Hubbells have donated in the past.)

Reporters were unable to view a list of organizations that received personal donations from the Hubbells or part of the $458,650 the foundation gave away last year. As the press release noted, Simpson College in Indianola was the largest recipient of the Hubbells' personal gifts in 2017; Fred Hubbell has long served on the college's board of trustees. Broadlawns Hospital in Polk County received the largest foundation gift last year, Link said. Several campaign mailings or television commercials have referenced the candidate's giving toward mental health services at Broadlawns.

Answering my follow-up questions, Link emphasized that the level of detail was comparable to what Governors Ray and Culver had provided while running for office. "Fred felt it was important to be transparent about the year before this election." Why didn't he release information from previous years? "He wasn't a candidate before 2017."

How do Iowans know that the income and tax payments and charitable donations for last year were representative of the candidate's financial situation? Link said "they are," and over time, Iowans would see that Hubbell's income "isn't going to change a lot going forward, because it's primarily pension income." Why not release these returns earlier in the summer? "They were just completed," Link said, adding that Hubbell "typically files in October" but makes his estimated tax payments throughout the year, so all taxes are paid before the April deadline.

Hubbell is not obliged to reveal details about his sources of income, real estate holdings, and past or present participation on corporate boards. But it's reasonable to ask those questions, for the same reason Democrats have called on Trump to release his tax returns. Business connections can pose potential conflicts of interest for an elected official. Other newsworthy information could be lurking in the tax documents too. After scrutinizing the Reynolds filings, Jason Clayworth reported for the Des Moines Register that Reynolds received $38,333 in wages in 2009 and $25,000 the next year from a company she had recommended to receive a lucrative government contract in 2007, when she led the Iowa County Treasurers E-Government Alliance.

I have no idea whether Iowa voters care about Hubbell's tax returns. Personal income level is far less relevant to the work of a governor than are management abilities or views about education funding, Medicaid privatization, tax policy, environmental protection, or reproductive rights. Anyway, the Democratic nominee's wealth is hardly a state secret. On the contrary, his and Charlotte's generous charitable giving was a major theme of Hubbell's direct mail and tv advertising for months before the June primary. The limited information provided on August 30 shows that Hubbell gave far more to charity in 2017 than Reynolds did--not only in absolute terms, but also as a percentage of taxable income.

I would have advised Hubbell to follow Vilsack's example and make some past tax returns public weeks or months ago. Failing that, the campaign should have acknowledged early on they didn't intend to provide full access to tax filings. Stringing reporters along, then offering summary documents for three hours won't defuse the controversy. Predictably, Reynolds and her Republican allies continue their drumbeat of claiming Hubbell "probably has something to hide." Count on the GOP to keep hammering on this talking point to distract from the many examples of the governor's mismanagement.

Login or Join to comment and post.