President Donald Trump has fought to keep his tax records hidden from the American public while claiming to be a successful businessman who promised to drain the swamp enabled by what he called a rigged system.
The New York Times has obtained tax return data on Trump and his companies that cover more than 20 years, dating from his New York real estate investor days through the beginning of his White House occupation. These are based not on Trump’s business activity, but instead on what he told the IRS his business activity is. “But they do offer the most detailed picture yet available,” David Leonhardt reported for the New York Times.
“We are not making the records themselves public because we do not want to jeopardize our sources, who have taken enormous personal risks to help inform the public,” Executive Editor Dean Baquet wrote in a note.
“We believe citizens should understand as much as possible about their leaders and representatives — their priorities, their experiences and also their finances,” Baquet wrote. “Every president since the mid-1970s has made his tax information public. The tradition ensures that an official with the power to shake markets and change policy does not seek to benefit financially from his actions.”
With a little more than a month before the 2020 presidential election, here are 15 things that the leak of Trump’s tax records tell us.
He paid no taxes during 18 years examined by The Times, and he paid $750 in 2016 and 2017 due to massive business losses. Trump did this while claiming to be a billionaire.
“I’m really rich” is what Trump said when he announced his intention to run for president, offering a document summarizing where his $8.7 billion net worth came from.
By comparison, Joe and Jill Biden paid $3.7 million in taxes in 2017, according to the tax returns released by the Democratic nominee.
Taxes on wealthy Americans have fallen a lot in the past few decades, NYT reported. Many can afford high-powered attorneys and accountants to find loopholes that reduce their taxes below statutory rates, but most affluent people still pay a lot of federal income tax.
In 2017, the average federal income rate for the highest-earning .001 percent of tax filers was 24.1 percent, according to the I.R.S. By comparison, Trump over the past 20 years paid about $400 million less in combined federal income taxes than the average ultra-rich person in that group.
That 24.1 percent is about the same as the net average tax rate paid by the average American worker in 2019, according to data from the Organisation for Economic Co-operation and Development.
Trump may be the richest U.S. president in history but often paid less in taxes than other recent presidents. Barack Obama and George W. Bush each regularly paid more than $100,000 a year — and sometimes more — in federal income taxes while in office. “Trump, by contrast, is running a federal government to which he has contributed almost no income tax revenue in many years,” NYT reported.
Trump faced huge tax bills after the initial success of “The Apprentice” reality TV show, but he got a tax refund for most of them. He paid $95 million in federal income taxes over 18 years studied by the NYT and later managed to recoup most of it with interest by applying for and receiving a $72.9 million tax refund.
Tweeting in his defense, Trump railed against the so-called “fake news,” saying he “was entitled, like everyone else, to depreciation & tax credits…..”
When Trump applied for the refund, he cited a huge financial loss — possibly related to his failed Atlantic City casinos. He said publicly that he had given up his stake in the casinos.
“But the real story may be different from the one he told. Federal law holds that investors can claim a total loss on an investment, as Mr. Trump did, only if they receive nothing in return. Mr. Trump did appear to receive something in return: 5 percent of the new casino company that formed when he renounced his stake,” NYT reported.
The IRS began auditing the legitimacy of the refund in 2011. The case is still unresolved for unknown reasons, and could end up in federal court, where it could become a matter of public record.
Trump has spent nearly 22 percent of his days in office at one of his golf properties for some portion of the day, according to Golf News Net.
His homes, his golf courses, the cost of his aircraft used to shuttle him between homes, more than $70,000 to style his hair during “The Apprentice” — he counted them as part of the family business, along with almost $100,000 paid to Ivanka Trump’s a favorite hair and makeup artist.
Companies can write off things they want if they call it a business expense. This helped reduce Trump’s tax bill.
Since 2010, Trump has written off around $26 million in unexplained “consulting fees.” In most of his projects, his companies set aside about 20 percent of income for these purposes, NYT reported. This allowed him to write them off as business expenses, lowering the amount of final profit subject to taxes.
His daughter Ivanka appears to have received some of these consulting fees, despite having been a top Trump Organization executive. Trump’s private records show that his company once paid $747,622 in fees to an unnamed consultant for hotel projects in Hawaii and Vancouver, British Columbia. Ivanka’s public disclosure forms — which she filed when joining the White House staff in 2017 — show that she had received an identical amount through a consulting company she co-owned.
In other words, Ivanka has helped reduce the family’s tax bill through large “consulting fees.”
Trump’s so-called failing or unprofitable companies served a financial purpose. They reduced his tax bill.
Since 2000, Trump reported losing more than $315 million at the golf courses that he often describes as the heart of his empire. Trump Tower in New York is an exception, earning him $20M+ a year in profits.
Selling his personal brand — the image of a wealthy businessman who profited from smart business management — has been the most successful part of Trump’s business, NYT reported. According to NYT calculations, Trump made $427.4 million from selling his image between 2004 and 2018.
Other firms, especially in real estate, paid for the right to use the Trump name and of course, “Trump’s brand also made possible his election as the first United States president with no prior government experience,” NYT reported.
The New York Times uncovered “chronic losses and years of tax avoidance.”
Trump got 50 percent of the profits from the hugely successful “The Apprentice,” which debuted in 2004 on NBC. He bought more than 10 golf courses and many other properties. The losses at these properties reduced his tax bill.
By 2015, money from “The Apprentice” began to decrease and his financial situation went downhill.
Trump seemed a long shot to win, but campaigning brought him what he craved — attention for his brand at a time when his businesses needed a new strategy, NYT reported.
He receives huge amounts of money from lobbyists, politicians and foreign officials who pay to stay at his properties or join his clubs. The Times investigation puts precise numbers on this spending for the first time.
New members at the Mar-a-Lago club in Palm Beach gave Trump an additional $5 million a year since 2015. The Billy Graham Evangelistic Association paid at least $397,602 in 2017 to the Washington hotel, where it held at least one event during its World Summit in Defense of Persecuted Christians.
In his first two years in the White House, Trump received millions of dollars from projects in foreign countries, including $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
Trump owes money on loans including some he personally guaranteed. He appears to be responsible for $421 million in lians that are due within four years. He appears to have not paid off any of the principal on the Trump Tower mortgage, and the full $100 million is due in 2022, NYT reported. If he loses the IRS dispute over the 2010 refund, he could owe the government more than $100 million including interest, according to NYT research.
In 2012, he took out a $100 million mortgage on the commercial space in Trump Tower. He also sold hundreds of millions worth of stock and bonds. His financial records indicate that he may have as little as $873,000 left to sell.
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If Trump is re-elected, the lenders he owes money to could have to foreclose on a sitting president. Whether he wins or loses, he may have to tap his 10s of millions of fans for money.
13. Did Trump do anything illegal?
His alleged large-scale tax avoidance may be controversial but is not necessarily illegal.
As millions of Americans deal with the financial pain from the coronavirus pandemic, allegations of tax avoidance could suck energy from his campaign.
It’s unclear how much political damage this will do, BBC reported. Allegations of sexual harassment in the run-up to the 2016 campaign didn’t hurt Trump enough to lose the electoral college.
Four years ago, when Hillary Clinton questioned Trump over how little he paid in taxes, Trump replied, “That makes me smart.”
Trump claims his business losses are due to the sacrifice he made by being president.
“They say, ‘Trump is getting rich off our nation,’” he said at a rally in Minneapolis in October 2019. “I lose billions being president, and I don’t care. It’s nice to be rich, I guess, but I lose billions.”
