"I am not a crook": Richard Nixon's Tax Problems, Part I






Richard Nixon at the Associated Press
Managing Editors annual meeting,
November 17, 1973.

"People have got to know whether or not their President is a crook. Well, I am not a crook."  President Richard M. Nixon said that at Disney World at the conference of the Associated Press Managing Editors Association on November 17, 1973.  (Video is here.)  He said it not in regards to the Watergate scandal but a personal issue—whether he cheated on his federal income taxes.

Last week I was reading a huge report the Joint Committee on Internal Revenue Taxation published in April 1974, five months before Nixon resigned the presidency.  Examination of President Nixon’s Tax Returns for 1969 Through 1972, S. Rep. 93-768, is a thousand-page doorstop.  Or it would be if I was looking at the printed edition—I used a PDF which was a massive 194 MB.

The biggest issue with Nixon’s taxes was the tax deduction he took for donating to the National Archives his papers from his time before he was president.  These papers covered his time as vice president under Dwight D. Eisenhower, his 1960 campaign for president, his 1962 campaign for governor of California, and his political activities before his 1968 presidential run. 

After President Lyndon B. Johnson took significant deductions for donating his papers to the United States, Congress passed the Tax Reform Act of 1969 to, among other changes, amend the Internal Revenue Code to end deductions for donations of papers made after July 25, 1969.  The Tax Reform Act of 1969 was signed on December 30, 1969, but had retroactive effect.  It also created the Alternative Minimum Tax. 

In March 1969, Nixon had placed boxes and file cabinets of papers in storage at the National Archives.  The archives stored them as a courtesy in expectation of a future gift to the government.  This courtesy storage had been done for prior presidents.  Nixon, however, did not deed them to the United States at the time the documents went to the Archives.  The papers did not belong to the nation by the July 1969 deadline.  Nixon’s agents were still working on appraising them and pulling select items from the files when the deadline passed.

Edward L. Morgan, deputy White House counsel, subsequently backdated a deed of gift so Nixon could claim the tax deduction.  The deed was dated April 1969, but it was prepared no earlier than March 1970 and not actually signed until April 1970. Morgan told The Washington Post in June 1973 that there was a “mad scramble” at the White House to preserve Nixon’s deduction when Congress was considering amending the Internal Revenue Code.  Morgan, who became an Assistant Secretary of the Treasury in 1973, was indicted for creating the falsely dated document.  He pleaded guilty, and was sentenced to four months in prison.  Nixon’s tax lawyer, Frank DeMarco, Jr., and the documents appraiser, Ralph G. Newman, were also indicted for conspiracy to defraud the United States for their part in the backdating of documents. 
  

(DeMarco was a law partner of Herbert W. Kalmbach, Nixon’s personal attorney; Kalmbach went to prison for violating the Federal Corrupt Practices Act for campaign finance issues.  DeMarco and Newman successfully moved for their criminal cases to be transferred from the U.S. District Court for the District of Columbia, where they were indicted, to the U.S. District Courts for the Central District of California and the Northern District of Illinois, where they resided.  United States v. DeMarco, 394 F.Supp. 611 (D.D.C. 1975).  The Central District of California dismissed the case against DeMarco because of prosecutorial misconduct in presenting the case to the grand jury.  United States v. DeMarco, 401 F.Supp. 505 (C.D. Cal. 1975).  The government reindicted DeMarco in California but the case was again dismissed because of prosecutorial misconduct.  United States v. DeMarco, 407 F.Supp. 107 (C.D. Cal. 1975). The government appealed the second dismissal but lost. United States v. DeMarco, 550 F.2d 1224 (9th Cir. 1977).  Newman, however, was convicted in Chicago of making false statements and fined $10,000.)

Because Nixon's donation was not actually made before July 25, 1969, Nixon was not entitled to claim a tax deduction for it.  Nixon claimed a substantial tax deduction.  Over four years, he deducted $482,018.  In 1969, Nixon deducted $95,298 for the papers and applied the rest toward future years.  In 1970, he deducted $123,959 for the papers.  In 1971, he deducted $128,668.  In 1972, he deducted $134,098. That left a balance to be applied to future years—the Joint Committee’s report is dated April 1, 1974, two weeks before returns for 1973 were due to be filed.

The report does not breakdown what the Joint Committee’s staff believed was the tax due specifically from the improper deduction of papers.  The staff concluded that Nixon had not included all income in 1969 and had taken other improper deductions besides the deduction for the papers.  For tax year 1969, Nixon reported an adjusted gross income of $328,162.  They concluded Nixon had underpaid his taxes in the amount of $171,055 for tax year 1969 alone.  The deduction for the papers for 1969 represented a substantial part of that deficiency.

I will discuss Nixon's other tax problems in a later post.

Sources

Joint Committee on Internal Revenue Taxation.  Examination of President Nixon’s Tax Returns for 1969 Through 1972.  S. Rep. 93-768.  Washington:  U.S. Government Printing Office, 1974.

Nick Kotz.  “Tax Break Sought for Nixon Papers.”  The Washington Post.  June 12, 1973, at A2.

Richard Philbrick.  "Newman Guilty in Nixon Tax Fraud."  Chicago Tribune.  November 13, 1975, at 1.

Richard Philbrick.  "Newman Gets $10,000 Fine in Nixon Case, Escapes Jail."  Chicago Tribune.  January 7, 1976, at 3.

Walter Pincus.  “Mr. Nixon’s Papers:  The Tax Question.”  The Washington Post.  January 7, 1974, at A18.

Timothy S. Robinson.  “Ex-Nixon Aide Gets 4 Months in Jail in Backdating of ‘70 Documents Gift.”  The Washington Post.  December 20, 1974.  A13.  (Morgan sentenced).

Timothy S. Robinson.  “Two Indicted in Backdating of Gift in Nixon Tax Case.”  The Washington Post.  February 20, 1975, at A1.  (DeMarco and Newman indicted).

Robert McG. Thomas, Jr., “Ralph G. Newman, Authority on Civil War, Dies at 86.”  The New York Times, August 3, 1998, at 8.

No right to sing in the post office

"There is no support for the assertion [that post office customers have a First Amendment right to sing  any sort of song in the post office lobby while standing in the service line."  That is the conclusion of the U.S. Court of Appeals for the Eleventh Circuit.  That court hears appeals from federal trial courts in Georgia, Florida, and Alabama.

Eric Watkins was singing in the post office as he waited in line to rent a post office box.  He was denied service by the postal clerk and told to leave. He did so and brought a lawsuit on the clerk's actions.  The trial court, the U.S. District Court for the Southern District of Florida, dismissed the case.  The Eleventh Circuit affirmed that decision, finding there is no constitutional right to sing in the post office.

The case is White v. United States Postal Employee, 11th Cir. No. 14-14608.  The text of the decision is here.

Credit to the ABA Journal website for the tip.

Police departments at private colleges are subject to Ohio's Public Records Act

A student reporter at Otterbein University in Westerville, Ohio, asked the campus police department for records under the Ohio Public Records Act (R.C. 149.43).  The request was denied by the university.  She filed a mandamus suit in the Ohio Supreme Court in 2014 asking the justices to order the university to produce the records.  The Columbus Dispatch in 2014 published a story on the filing of the suit.  Ohio's Attorney General, Mike DeWine, filed amicus briefs in the case supporting the reporter's request.

On Thursday, the justices found that because the university police department's sworn peace officers have been given the power by the state to enforce laws, the police department qualifies as a public office and the department is subject to the Open Records Act.  The court ordered the department to comply with the reporter's request.  The vote on the unsigned decision was 4 to 3.  Justice Terrence O'Donnell wrote a dissent that was joined by Justice William O'Neill.  Justice Sharon Kennedy dissented without writing an opinion.

The decision in the case, State ex rel. Schiffbauer v. Banaszak, is here.  The filings in the case are here.  The Supreme Court press office's summary of the decision is here.  Stories on the Supreme Court's ruling appeared in The Columbus Dispatch, Cleveland.com, Inside Higher Ed, and the Chronicle of Higher Education.

The Dispatch in 2014 published an investigation finding that private police forces were able to keep records of arrests and investigations secret, both from those they arrested and crime victims.