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.
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.”
I see no need to defend the president’s patriotism, but this is a bad way to think about taxes. Strictly speaking, it isn’t your patriotic duty to pay taxes; it’s a legal obligation. If patriotism were sufficient motivation to raise tax revenue, we wouldn’t put people in jail for not paying their taxes. (And to be even more precise, you are not required to pay taxes; you are required to file a return.)
Take Trump out of it for a second. Do you claim dependents on your taxes? Do you write off business expenses? Do you do whatever you can within the bounds of the law to lower your tax burden? Assuming the answer is “yes,” do you think that makes you less of a patriot than someone who deliberately pays more than they owe? More to the point: Do you know anyone who, in an abundance of patriotic zeal, actually pays more than they owe? I don’t.
Tens of millions of Americans receive more money from the government than they pay in income taxes—and a great many receive more than they pay in any form of taxes. Roughly 76 million Americans paid no income taxes at all this year, according to the Urban-Brookings Tax Policy Center. In 2017, according to the National Bureau of Economic Research, 17.6 percent of tax returns claimed the Earned Income Tax Credit, meaning they not only didn’t pay income taxes, they made money off their income taxes. Do we really think this reflects on their patriotism?
If so, what are we to make of the fact that the richest 1 percent still pay more in income taxes than the bottom 90 percent combined? Are the 1 percent super-patriots?
A more common complaint is that our tax system is unfair if it lets people like Trump get away with not paying income taxes. I agree that the system is a mess. But, as with the unpatriotic charge, I’m not sure fairness is the best ground to stand on either.
The main reason Trump could avoid paying income taxes is that he was a lousy businessman—or at least that’s what he told the IRS (and what mountains of evidence suggest). If you want to set up a system where businesses can’t claim losses, let’s hear your proposal. But doing so could be unfair to a lot of people.
The true relevance of this story is political. Trump ran for president on the claim that he would run government like a successful businessman. He’s not one. He’s a marketer and promoter. Indeed, he’s arguably the most successful person in American history at pretending to be successful at something he wasn’t successful at.
It’s not just that. Trump is making money from countries ruled by strongmen he praises. Trump has even admitted he has a “conflict of interest” (his words) with regard to Turkey because he owns buildings there. He is in debt to the tune of hundreds of millions of dollars. Because he never released his tax returns, as previous presidential candidates have for decades, voters couldn’t take any of this into account. Because he refused to put his interests in a blind trust, he is deeply conflicted.
As for the tax issue, all Trump’s behavior proves is that in a needlessly complex system, the people with the most resources will be better positioned to navigate it. Perhaps that’s unfair, but it’s also a universal truth. Don’t hate the player, hate the game.
Photograph by Jacob Kepler/Anadolu Agency/Getty Images.