What Every Voter Should Know About Trump's Taxes
The only way you didn’t hear about The New York Times‘ multi-story exposé on Trump’s taxes last month is if you were living alone in the woods or were in a coma. But it’s a lot of information to unravel, and unless you’re extremely tax literate (and most Americans don’t have reason to be), it’s hard to get at the root of what all that information really means. Can someone really spend — and claim as a deduction — $70,000 on… hair care? Can a billionaire real estate mogul really get away with paying zero income taxes year after year? In the five years leading up to his presidency, Trump paid no income taxes at all, and only $750 in both 2016 and 2017. How is that possible?
Is Trump a con man, a money launderer, or a business genius (or failure) exploiting a system that was perfectly designed to benefit people like him?
When asked about the Times’ articles during the presidential debate in September, Trump said, “Like every other private person, unless they’re stupid, they go through the laws, and that’s what it is.”
Uh, okay, but we can all just close our eyes and imagine for a second how the GOP would have reacted if Obama had pulled this stunt?
A Bird’s Eye View of Trump’s Income
According to The New York Times, from 2000 to 2018, Trump’s net income breaks down like this:
$230 million: Licensing and endorsement deals
$197.3 million: The Apprentice $178.7 million: Investments -$174.5 million: Companies run by Mr. Trump
The largest hunk of his income, the licensing and endorsement deals, are largely attributed to his success with his long-running reality show, The Apprentice, which, ironically, made him into much bigger of a mogul than he claimed to be at the start of the show. He leveraged his famous name, renting it out as an endorsement for Oreo cookies, Domino’s Pizza, and even neckties.
To be fair, many of Trump’s real estate ventures do play out extremely well, especially his retail and commercial enterprises in New York City. From 2000 to 2018, Trump Tower in Midtown Manhattan pulled in $336.3 million profit, and Trump World Tower on the East Side of Manhattan more than $167 million.
His golf properties are horrendous failures though, declaring losses of over $315.6 million from 2000 to 2018. Some have noted that these money-hemorrhaging ventures have many of the markers of a money laundering operation. What successful business mogul would continue to operate businesses that are such obvious losers if he didn’t have something else to gain from it?
A Billion-Dollar Tax Deduction. Oh, Wait. Two Billion-Dollar Tax Deductions
Prior to The Apprentice, Trump had been able to avoid paying taxes thanks to claiming and carrying forward nearly $1 billion in losses he incurred in the 1990s, effectively canceling out income earned in the ensuing years. But he made enough income on The Apprentice and resulting licensing and endorsement deals in 2005-2007 that he couldn’t skirt $70 million in taxes he owed.
The Times points out that Trump did pay $95 million total taxes over the course of the 19 years it examined, but — and here’s where Americans should rightly be scratching their heads — he once again declared $1 billion in losses in 2008 and 2009. In doing so, he managed to reclaim nearly the entire amount of taxes he’d paid in 2005-2007, to the tune of a $72.9 million federal tax refund and $21.2 million in state and local refunds. Unsurprisingly, these extraordinarily massive refunds raised a red flag with the Internal Revenue Service. Trump’s returns have been undergoing an IRS audit for the past 10 years.
Two billion dollars in losses claimed as a tax deduction for a single individual. This is not normal.
Trump Doesn’t Pay His Debts
Usually, when a borrower defaults on a loan and that debt is forgiven, the IRS considers the forgiven debt income and the borrower must pay taxes on it. But Trump’s tax records don’t show this. His returns show that he has defaulted on $287 million in loans since 2010 and has avoided paying taxes on much of that forgiveness because of how he maneuvers his extensive losses.
Imagine borrowing a shit ton of money, losing it by investing it badly, having the debt forgiven, and then avoiding paying the taxes on the forgiven debt because you count the loss as a deduction. (Another point worth noting: the lender that forgives the debt also gets a deduction. This is how the super rich live lavishly by shuffling money around and sticking it to the IRS.)
Perhaps the greatest red flag of the Trump tax fiasco is the fact that he is so hell-bent on keeping his returns a secret at all. This is extremely atypical for an American president. In fact, Trump is the first president in four decades not to release his returns. He cites the ongoing IRS audit as the reason he won’t release them, but there is no law or restriction that says he can’t release returns while under audit. The fact is, Trump is simply choosing not to release his returns. It is a deliberate, active choice he is making. Americans should ask themselves why.
Trump Appears To Be Paying Family Members “Consulting Fees” Which He Then Writes Off
The New York Times reported that Trump wrote off $26 million in “consulting fees” as a business expense across multiple projects. The names of the “consultants” aren’t mentioned on the returns; however, amounts on Trump’s returns happen to exactly match, to the dollar, income that Trump’s daughter Ivanka claimed as income on her financial statements.
The IRS doesn’t take kindly to companies paying high consulting fees to individuals who aren’t actually independent contractors, especially if doing so is simply a tactic to avoid paying payroll taxes.
Is This Just What Billionaires Do?
Sadly, in a word, yes. The super rich often live lavish lifestyles while ensuring every expense is a “business expense.” Every vacation is a “business trip,” and every outing, every meal, is a “business meeting.” Billionaires hire teams of tax planners who carefully plot how their client’s wealth is held, advising them to utilize the most “tax-effective” vehicles for holding investments. The super rich make charitable donations that get them huge deductions that people of average means cannot reach even if the amount they donate is a far greater proportion of their overall income.
The super rich create revocable living trusts to pass down family wealth while avoiding estate taxes. The super rich know how to get out of paying debts without sacrificing their lifestyle, they know how to go bankrupt without losing their possessions or their money, and they know how to carry forward major losses so they can avoid paying taxes for years on end. Real estate developers avoid huge capital gains tax bills by deferring the gains from the sale of one investment and rolling them into the purchase of another.
If This Is All Legal, Why Should Voters Care?
What I hear from Trump voters, again and again and again, until I want to fork myself in the ear, is that Trump is “a regular guy” or “just one of us!” or “sticking it to the man like the rest of us wish we could!”
Trump supporters need to take a breath, step out of their convictions for a moment, and honestly ask themselves — is a billionaire who games the system with no intention of changing it so that middle class Americans can enjoy the same benefits as he does (zero income taxes) really one of us? Is this person who happily tosses aside billions of dollars of losses so he can claim them against future tax bills really the guy we want to help us get through our financial struggles?
Watch the stock market soar on pure speculation as tech giants enjoy the tax breaks and stimulus cash Trump’s CARES Act doled out. Watch big investors swoop in to snap up dying family-owned businesses and foreclosing homes. Understand that Trump is not the guy fighting to keep his family business afloat. He’s the predator lying in wait for your business to fail so he can snatch it out from under you. Trump isn’t a regular guy sticking it to The Man. Trump is “The Man.”
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