Five takeaways from NYT Trump taxes bombshell
The New York Times on Sunday published a groundbreaking look into President TrumpDonald John TrumpNew Biden campaign ad jabs at Trump’s reported 0 income tax payments Ocasio-Cortez: Trump contributed less in taxes ‘than waitresses and undocumented immigrants’ Third judge orders Postal Service to halt delivery cuts MORE’s finances based on more than a decade of tax documents closely guarded by the president.
The bombshell report shed new light onto how Trump reportedly used his business empire to wipe out much of his own income tax liabilities, but at potentially high financial and legal risk.
Here are five key takeaways from the report on Trump’s taxes.
Trump paid almost nothing in personal income taxes for nearly two decades
Trump was able to avoid paying income taxes for 10 of the 15 years preceding his election in 2016, according to the Times, and paid just $750 in income taxes during the first two years of his presidency.
Trump was able to avoid income taxes through a range of provisions in the tax code that pertain to pass-through entities — businesses that treat income as the personal income of their owners.
Through these provisions, Trump was able to claim the immense losses experienced by some Trump Organization hotels and properties, the depreciating value of buildings he owns and expenses he claims were related to his business operations as deductions from taxes that would have been owed on income for other parts of his empire.
“There are some rather creative ways in which developers account for income and write off expenses,” said Thomas Cooke, professor of business law at Georgetown University. “Our tax code has been very favorable in how it looks at real estate developers as opposed to you and I as individual taxpayers.”
Business losses protected his personal gains
Much of Trump’s personal tax liability was covered by a $72.9 million refund he received in 2010, according to the Times, claiming losses potentially driven by the failure of his Atlantic City Casinos. That refund, which has been under federal scrutiny since 2011, helped wipe out $95 million in income taxes Trump paid over three years.
Trump has frequently claimed the losses seen across much of his organization against the income earned from the successful aspects of his businesses. While Trump’s golf courses have reportedly lost more than $300 million since 2000, the president made more than $427 million between 2004 and 2018 by licensing his name and image, according to the Times.
“It’s possible for investors in real estate projects to generate tax losses, even if they are having gains in terms of economic income,” said Mark Mazur, director of the Urban-Brookings Tax Policy Center.
Financial record at odds with Trump’s boasts and disclosures
The trove of financial information Trump obtained by the Times revealed discrepancies between how much money the president claims to have made and how much he told the IRS he did.
Trump claimed in his 2018 financial disclosure to have made $434.9 million that year, and blasted the Times in a Monday tweet for failing to consider the value of the assets he owns.
“The Fake News Media, just like Election time 2016, is bringing up my Taxes & all sorts of other nonsense with illegally obtained information & only bad intent,” he tweeted.
But according to the tax documents obtained by Times, the president lost $47.4 million in 2018 as many of his golf courses and hotels bled money.
“The president has been relying on disclosing financial records, which is a requirement by the way of law, and those are nowhere near a tax return,” Cooke said.
A ton of debt — and due soon
Trump appears to be in an increasingly precarious financial situation as hundreds of millions of dollars in debt he owes will soon be due for collection. The Times estimated that Trump owes $421 million in loans he personally guaranteed in addition to the potential debt he may owe the IRS pending the investigation into his $72.9 million tax rebate. Trump also owes the entirety of a $100 million mortgage on Trump Tower due in 2022.
And at least $155 million in debts Trump listed in his 2020 financial disclosure are due by the end of 2024, the final full year of his potential second term.
Trump could face serious legal consequences
The financial information unearthed by the Times revealed several areas where Trump could be vulnerable to civil or criminal charges for tax or financial services fraud.
In a court filing last month, the Manhattan DA’s office suggested that a subpoena it issued in 2019 is part of an investigation into “possibly extensive and protracted criminal conduct at the Trump Organization,” including potential fraud allegations detailed in media reports in recent years.
Moore and Mazur said that the IRS may scrutinize the legitimacy of the personal expenses Trump claimed a business-related costs that were cited in the Times article — such as $70,000 in haircuts one year and consulting fees paid to his daughter, Ivanka TrumpIvana (Ivanka) Marie TrumpTrump didn’t pay income tax for 10 of 15 years before 2016 election: NYT The Hill’s 12:30 Report: Trump stokes fears over November election outcome Special counsel investigating DeVos for potential Hatch Act violation: report MORE, in addition to her Trump Organization salary.
George Mason University law professor J.W. Verret, who has previously called for Trump’s impeachment, also cited disparities between the value of assets the president reported on bank documents and the losses he claimed on tax forms as a potential red flag.
Such discrepancies, Verret said, could provide fuel for New York District Attorney Cyrus Vance’s investigation into the Trump organization’s finances.
“You can’t say for sure there’s been fraud until you’ve seen the tax returns, seen the bank loan applications, and done some more diligence,” he said. “But, boy, with what we have so far, there’s more than enough to start a fraud investigation and devote huge resources to it.”
Updated at 4:56 p.m.
Published at Mon, 28 Sep 2020 19:23:59 +0000