Trump’s Tax Returns Show Simply That He’s a Lousy Businessman

And also that our tax code is needlessly complex and ripe for exploitation.

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What shall we make of the president’s tax situation?

If the New York Times’ accounting is correct, Trump has paid little (or nothing) in income taxes for a long time. In both 2016 and 2017, he paid $750 to Uncle Sam. In 10 of the last 15 years, he paid nothing, nada, zilch. If the story is “fake news” as he claims, he could simply release his tax returns and sue the Times for defamation. That he isn’t doing so suggests the Times’ story is largely accurate.

Even so, assuming the president and his cadre of accountants broke no laws, I’m not sure it’s something everyone should get so upset about. Or, to be more accurate, I’m not sure everyone is getting upset about the right things.

The Times report, writes CNN’s Zachary Wolf, confirms Trump “often paid little or no federal income tax and suggests running for president and being elected did nothing to awaken a patriotic sense of tax-paying duty in Trump.” The president’s niece, Mary Trump, said on MSNBC that her uncle’s tax avoidance is “deeply unpatriotic.”

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  1. Victoria Ferauge

    I'm certainly no fan of the US tax code. I've lived and worked outside of the US for about 30 years. In that time not one penny of my money was earned in the US. Not one centime of my savings in France came from the US. And yet I am still subject to the US tax code and must file US tax returns and bank account declarations every year. (And this year was a doozy with a US tax return of about 100 pages. No, I'm not rich - I was ignorant and put some of my savings in something the US consider to be a PFIC - a mutual fund not based in the US which I opened because US banks won't take my money because I live outside the US. What a mess it's been.)

    The US is one of the only countries in the world to require its citizens and Green Card holders living abroad to file tax returns on the money earned abroad. I feel very strongly that this is not just. This is THE issue that has had me voting Republican (the culture war stuff or who is on the Supreme Court has zero impact on my life) is because they agree that I should not be subject to the US tax code, while the Democrats refuse to change the system which they seem to think is some model for the rest of the world.

    Alas in spite of Republican promises Trump and their tax reform pretty much blew us off (and in the case of American business owners abroad actually made things worse.)

    I note that Republican Overseas sent a letter back in September to Meadows asking that something be done (Executive Order?) about all this for overseas Americans. http://republicansoverseas.com/wp-content/uploads/2020-Letter-on-EO-for-Overseas-Americans-FOR-RELEASE.pdf.

    I appreciate that they tried. I have zero faith that anything will actually happen. I am angry enough about it to go all-in for the Dems this time around.

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  2. CatoTheElder

    Individual income tax plan, draft A:

    1. First $25K untaxed.

    2. $25-50K taxed at 10%; $50-100K at 12.5%; $100-250K at 15%; $250K-1M @ 17.5%; above 1M at 20%.

    3. No deductions.

    4. All income taxed per above schedule.

    Yes, this is just “Draft A”. Feel free to adjust, etc. But I’d require that the entire income tax code be printed on one side of an 8.5x11” sheet of paper, 12-pt Helvetica, standard margins.

    I’m pretty sure CPAs and tax attorneys can be re-trained to flip burgers, fix flats, deliver pizza, and even carry a tray of drinks.

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  3. @fakeJohn

    100% agree on paying taxes. If you can pay less within the law, than do it. The idea that it is somehow patriotic to willingly give the government extra money in taxes is just stupid. When Democrats and pundits make a big deal about how someone "didn't pay their fair share" I cringe. If you don't want people using "loopholes" to avoid paying taxes, blame the legislators who put them into the tax code to begin with.

    What does concern me about then NYT report, and what Jonah mentions are the 100s of millions in loans that come due in the next four years, the potential 100 million dollar judgement coming from the IRS and the assets in Turkey and Russia. I suspect these things would make it difficult for a regular person to even get a security clearance much less control the military. This is why releasing tax returns is important.

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    SAB

    Our tax code is ridiculously complex, but even a beginning tax accountant will coach his clients in how to offset years of substantial income with high deductions or losses. And even how to generate losses for tax purposes which can be different from book or accounting purposes. It is built into the system of how gains and losses are accounted for; and is evidenced by the fact that it drives lots of activity in the stock every December and January. The fact that President Trump would have paid $7.5 million in alternative minimum tax is at least an attempt by our current tax code to get around the utilization of these tactics. Again, I agree with the conclusion here, it is the game that need reform. Let's not pretend Mr. Biden isn't employing same of the tax stategies; he's just not been successful enough in business to have the same disparities. Being so jealous of someone's success seems less patriotic - and too much a victim-hood mentality to suit me. Isn't it more patriotic to wish everyone success?

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  5. Tim Bilbro

    This pretty much sums up my thinking about it. I have always thought that he ran for president merely to get more out of his brand, and not because he'd actually expected to win. Honestly, it would be better for him financial to lose, so he could start his counter-programming and get back to his fabulist fame-building. He wouldn't have the constraints he has, however loosely enforce and ignored, and could focus on 'his people'. I cannot fathom why he would want to win at this point. He has nothing to gain, unless by some miracle the GOP takes the House.

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    1. Tim Johnson

      The speculation is that he's afraid of losing because he'll be brought up on tax-evasion and perhaps other charges. If he stays in, he'll be safe. What a great country.

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  6. Brian

    Trump may or may not be a good businessman. I much deeper dive into financial statements would be required to determine this. However, as someone who runs multiple businesses, one of which is a real estate investment company, I would have been shocked if he wasn't reporting losses relative to his real estate. Our real estate investment company reports annual losses while also remaining cash flow positive and very lucrative. The Dispatch could do a real service and have someone educate readers about the depreciation methods that real estate companies use to show losses relative to tax obligations.

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      JohnF

      The assumption with depreciation is that the asset is actually losing value. If you are in the widget-making business and you buy a new widget-maker, but that widget-maker will wear out after 20 years, the tax system is set up to allow you to deduct a portion of the initial cost for years (in recognition that the original asset is losing its value over time).
      Real Estate is a bit different because it often doesn't wear out (particularly the land).

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  7. Merlin

    The point is not so much how little if any tax he pays but who is constantly providing him with massive uncollateralized loans that he promptly proceeds to invest, lose, and declares bankruptcy, rinse, repeat. Oligarchs with dirty money that they need laundered?

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  8. Ragnar

    I don't like Trump, but unless he's done something illegal, this issue is only a political one. Anybody who benefits from the tax code deductions is a hypocrite if they don't support Trump using all legal means to reduce his tax liability. I'd rather see a flat tax, where EVERYBODY pays - including the lower-middle class. If we think paying taxes is a moral duty, let's ensure all moral actors are in play.

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    Dr. Livesey

    "Strictly speaking, it isn’t your patriotic duty to pay taxes; it’s a legal obligation." I can't understand a view of patriotism that *doesn't* include a patriotic duty to pay some level of taxes that supports the government services we all use, if you can do so. I don't know what that level should be, but it's got to be a heck of a lot more than $750 for anyone we'd consider rich.

    Legality is currently beside the point (although, for the well-off I'd support perhaps a tax on double your local property assessment if your income tax starts scraping the bottom after deductions, and a minimum income tax payment despite any deductions).

    Anyone well-off or rich, by definition, has money to spare, and therefore the ability to help those who don't. And therefore the obligation, as everyone from Jesus to Mohammed to Dickens to Spider Man (and, I'm pretty sure, nearly all major religions) will tell you. That obligation certainly extends to paying at least your fair share of what the government spends on the government services you use, as well as the shares of what many of the poor use. Then it extends to charity. Business investment that produces jobs and economic wealth for others might be included, but it's risky, and you expect back a good return on that investment, so by itself it might not count. But taxes and charity are a moral obligation.

    The same moral intuition that tells you fair dealings are right and justice is right and that people shouldn't hurt others (unnecessarily) tells you that charity is right and that paying your fair share of taxes is right. The exact amount of what a fair share is can be debated. But it ain't $750 for a rich man. No way.

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      Earl King

      There is no morals clause in the Tax Code. The top 20% of earners pay 87% of all Federal Taxes...so we really do have a progressive tax system. It works if you are a fan of a progressive system....Your quibble is using business losses to offset income. When you loose more money than you take in you legally deduct it. Your argument is with the Tax Code. However I understand write off on your business...what I don't understand is he should have two tax returns...personal and business. He must have some personal income? That is what he should pay taxes on....I can't all those losses being personal...

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    Jordan

    "He is in debt to the tune of hundreds of millions of dollars."

    This is the big problem. The debt makes him vulnerable to being manipulated or putting personal gain above the best interests of the country. Would the US government normally give a security clearance to someone even $100,000 in debt?

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      Man-Eating Cow

      Depends on how you measure it. I know government employees with top secret clearances who are living in houses with mortgages far in excess of $100,000. But it's fine, because the house itself is the collateral to cover the loan and these folks are keeping up with their payments.

      In other words, there's debt, and then there's debt.

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        Jordan

        You are right about the mortgage (or any other debt where there is collateral to cover the loan).

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        1. Ragnar

          To get a fair picture, you'd have to do a net worth calculation. He could sell Trump Tower and (probably) be completely out of debt. At that level...people's finances are different than the average top secret clearance holder's...

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            JohnF

            Assuming he actually owns Trump Tower 100% and whatever his ownership is hasn't already been pledged as security against his loans.

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    2. Jaybrown

      Elected or appointed official, yes. Employee, no.

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