Trump’s Taxes

November 10, 2020

via+Michael+Vadon

Photo Credit: Michael Vadon

via Michael Vadon

A few weeks ago, the New York Times published a bombshell report full of revelations about President Donald Trump’s tax returns. Having obtained a copy from a source they refuse to reveal (pesky journalists), they revealed things such as the fact that the President has not paid income taxes for 10 of the last 15 years. Not to mention, for two of those 15 years, his accountants found a loophole for him to only pay $750 in those taxes. In fact, in 2017, he paid more in personal taxes to foreign governments than to the USA. We should also note that the President effectively admitted to not paying taxes in a 2016 Presidential debate.

We’ll have to start with how Donald Trump managed to pull off his tax avoidance and the state of his finances. Reports by Forbes and the New York Times have shown that Donald Trump is in a massive amount of debt; this debt is mostly loans that he’s taken out on his vast collection of properties. For the eager Democrats in the room, there is no line in his tax returns that states “RUSSIA LOANED ME 1 BILLION DOLLARS” or even something to that effect. The fact that he’s in debt shouldn’t be very significant given that 80% of adult Americans are in debt; these debts range from credit card debt, car payments, mortgages, and anything in between. It’s a normal part of life for most people. However, these aforementioned organizations found that approximately $300 million of Donald Trump’s debt is going to be due from 2020-2024.

While this usually wouldn’t be very concerning, Donald Trump has shown through his blatant violations of the Hatch Act (think of the final night of the RNC) and through his manipulations of the DOJ to fight his personal cases (think of the DOJ’s intervention in the E. Jean Carroll case) that he’s not above wielding the powers of POTUS to serve himself. We’ve seen VP Pence stay at an Irish Trump property 180 miles away from where he was having meetings, clearly taking taxpayer money and handing it to the Trump organization. At the International Trump Hotel in D.C., various lobbyists, political operatives, foreign diplomats, and domestic organizations can be seen gathering and hosting events; a Republican operative described it as “a magnet for unsophisticated foreign governments and companies to offer tribute. . . it is perceived as a path to influence.” Many supporters of the President will point out that previous holders of the office have owned properties and they haven’t been criticized as he has. This is true. However, it should be noted that previous presidents have completely relinquished ownership of their businesses or placed these
properties in a blind trust to avoid any potential impropriety. Breaking with precedent, (as he is famous for doing) President Trump has relinquished control of operations in his businesses; however, he still holds stake in his companies and will continue to profit from them. A 2018 financial disclosure statement showed that he earned almost $41 million from the D.C. hotel alone. This hotel clearly isn’t the only property Trump benefits from (Mar-A-Lago is another famous one), but it’s a great example of him improperly using the office of the Presidency.

It would, of course, be unfair to assume that the President would use taxpayer dollars to pay off his debt. He’s worth billions of dollars, there’s no reason for him to run headfirst into a scandal just to avoid losing a few million dollars. The only problem is that Mr. Trump may not have as much cash as we suspect. We know that he continues to receive income from branding deals (because of his fame on The Apprentice) and through certain real estate investments. With a total of $427 million in income from 2005-2018 and a total of $276 million through investments in office buildings, President Trump should be paying millions of dollars in taxes every year. The key to this puzzle lies in the businesses that he happens to prop up: it seems that he invests in failing businesses (thereby reporting losses on his taxes) which exempt him from paying federal taxes. In some cases, these losses are able to carry over and allow him to not pay income taxes in the next few years as well. The strange thing is that many of the businesses that Trump holds in high esteem are losing him money.

The Trump Organization owns 17 golf courses across the globe and has lost $315.6 million on them since 2000. Even his hotel in D.C. is losing money, reporting $55.5 million in losses from 2016-2018. It seems that investing in failing businesses to avoid taxes isn’t exactly the best way to stay rich. President Trump has infused cash into his struggling businesses and personally guaranteed loans to multiple creditors, loans which are going to be due in the President’s second term. As of 2018, the President hadn’t paid down the principal on any of his loans, which means that the full force of those debts are going to hit him in the coming years.

Now, here’s where things get complicated. The reporters from the New York Times and the President’s accountants are far more financially literate than any of the writers at the Informer, especially given that none of us know how to pay taxes. There is something called an alternative minimum tax which is supposed to make sure that the ultra-wealthy cannot do what the President is doing: using business losses to wipe out any financial responsibility. However, his team of lawyers and accountants were able to skirt the President’s financial burden through a series of legal maneuvers which involved filing for an extension on his 1040 form. He also used up some tax credits which he had accumulated from turning a historic Post Office into his International Hotel to
make sure that he wouldn’t have to pay millions of dollars in taxes.

We’ve constantly heard that the IRS is auditing the President’s taxes, which is why he can’t release them. We should clear up, you can still show your tax returns even if you’re under audit. However, the subject of his audit, started in 2011, is the $72.9 million that the President gained as a result of a financial bailout signed into law by President Obama. Essentially, in an effort to reduce the burden on business owners affected by the Recession, President Obama signed a bill which allowed for owners to request a complete refund on taxes paid in the past 4 years (if they’d
lost certain amounts of money in the Recession). On any other taxes paid over 4 years ago, business owners would be eligible to receive 50% of their taxes back. Normally, business owners could only wipe out their tax burdens going back 2 years. The President, who had declared losing $1.4 BILLION from his core companies in 2008 and 2009, was able to get back the $72.9 million that was mentioned earlier. This figure was effectively what he paid in taxes from 2005 to 2007, with some interest. Many readers may be wondering, “How in the world was the President able to lose
$1.4 billion in two years and still be semi-financially stable? ” Well, in 2009, he abandoned his stake in his failing Atlantic City casinos and was able to write the loss of that value on his taxes; the use of the word “abandoned” seems to be important here since that allows him to pull a legal stunt with the IRS to write off that loss. Unfortunately, it seems Mr. Trump didn’t quite meet the requirements for the stun, which is why the IRS has been auditing him for so long.

The President’s tax returns also show him paying out exorbitant fees to various consulting firms, such as $1.1 million payment on a $5 million deal in Azerbaijan or the $630k of payment on a $3 million deal in Dubai. While his returns don’t show the exact company to which he paid the fees, the New York Times reporters saw that Ivanka Trump’s financial disclosure, which was made available when she joined the WH staff in 2017, showed her receiving payments to the tune of $747,622—the exact amount of money that The Trump Organization wrote off in consulting fees for certain hotel projects in Canada and Hawaii. When project insiders in Azerbaijan or Turkey were questioned about the involvement of a consulting firm, they definitively stated that there was no independent third party playing a role in any of these projects. Yet, the returns show consulting deductions that were paid out to someone. Ivanka disclosed on her report that she received her payments from TTT Consulting, LLC. This corporation seems to be one of many entities that fall under The Trump Organization umbrella with “TTTT” or “TTT” in their names. On her website, Ivanka was listed as a senior executive at The Trump Organization and in a 2011 deposition, Mr. Trump stated that the only people he trusts to handle important licensing deals are Ivanka, Eric, and Donald Jr. It’s a testament to Ms. Trump’s time managing skills that she was able to be so intimately involved in her father’s organization while consulting for a separate organization while also helping raise her children.

The President isn’t only writing off consulting fees on his returns; he’s also writing off hair styling, luxury items, estate taxes, and political legal defenses (which isn’t quite legal). The Trump brand and business seems to be based off of the persona of Donald Trump (not necessarily the real Donald); a lot of his business acumen seems to be branding himself as more than he is. It’s a strategy that’s made fact-checkers the bane of his existence. If one can claim that the mogul persona is Donald’s biggest money maker (and his cash flows from The Apprentice seem to support that claim), then anything to help him keep up his persona (private jet rides, fancy hairstyling, etc.) should be considered a business expense. By that train of logic, these things are necessary to run his business. He’s also been able to avoid paying estate taxes by classifying his luxury mansion in upstate New York as a business—something to make a profit. However, by admission of The Trump Organization’s website and the Trump children, the estate is treated as a vacation residence of the Trump family.

The state of the President’s finances is a confusing mess, which is to be expected. It’s filled with legal loopholes and Herculean feats of tax evasion. The only problem is the idea of tax avoidance, something that this article hasn’t touched on quite yet. I like to think that I’ve been fairly objective in this article, but a famous quote from Justice Oliver Wendell Holmes, Jr. comes to mind: “Taxes are the price we pay for a civilized society.” For someone as rich as Donald Trump to go to these great lengths just to avoid contributing to our society disappoints me deeply. Our taxes allow the government to function, for better or for worse. Our taxes are funding our education system, Social Security, Medicare, Medicaid, and they allow for massive government projects that have undoubtedly made the lives of many Americans better (think of Interstate highways). Tax avoidance is not moral and it should not be praised as smart; those that lead us are supposed to be the best among us. That’s why we call them leaders and follow them.

The views expressed within this article are those of the author and not necessarily those of Cistercian or The Cistercian Informer.

1 Comment

One Response to “Trump’s Taxes”

  1. Diem King on November 13th, 2020 7:20 pm

    I am in awe at your amazing writing style and detailed research for this story. Once again your wit makes this piece so entertaining yet informative. I look forward to reading more of your work!

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