As if this year’s US presidential race wasn’t strange enough, the New York Times has unleashed an astonishing report on the president’s finances and taxes. Will these revelations affect the balloting – or even the Tuesday debate between Donald Trump and Joe Biden or are the other woes already overwhelming voter attention?
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
– Ben Franklin, letter to Jean-Baptiste LeRoy, 1789
Things as certain as death and taxes, can be more firmly believ’d.
– Daniel Defoe, The Political History of the Devil, 1726.
’Tis impossible to be sure of any thing but Death and Taxes.
– The Cobbler of Preston by Christopher Bullock, 1716
In the classic film The Wizard of Oz, there is the plot-hinge moment when Dorothy, the Cowardly Lion, the Scarecrow and the Tin Man have supposedly reached their goal – they are finally speaking with the actual Wizard of Oz, the man whose powers can grant them their respective wishes. But then, for no immediately apparent, obvious reason, Dorothy’s little dog, Toto, runs over to a curtain on the side of the vast hall and the dog pulls down the curtain to reveal an old man, someone who is definitively not the fabled wizard.
For years, through various artificial and pre-CGI devices, that wizened old guy has been creating the illusion of his vast powers and munificence as he rules over Oz. And now here we are as well. Oz is America, the travelling quartet is the American voters, and the fraudulent old man behind the curtain is Donald Trump – and Trump is definitely no wizard. And in this current movie, The New York Times has become one brave little mutt.
Overnight between Sunday and Monday, 27-28 September – just a short while before the long-anticipated one-on-one debate between incumbent President Donald Trump and challenger Joe Biden, the former vice-president under Barack Obama – The New York Times unleashed a tsunami of revelations about Trump’s financial and tax finagles. This story has torn the curtain away from any sense that Trump is any kind of financial and business genius, let alone even an honest one. Gone, gone for good.
What is left is some truly serious reputational rubble and the real possibilities of serious criminal charges to be faced, the moment he stops being the president. (A guiding Justice Department rule is that a president cannot be charged with crimes other than “high crimes and misdemeanours” as mandated in the Constitution.) And that threat, of course, helps explain why he is so very desperate to hold on to his current day job, regardless of any broken china he may cause domestically or internationally.
For years, there have been nibbles at making sense of Trump’s finances, in biographies like Trump Revealed (reviewed here), among others. And yes, there have been earlier articles in sober-minded publications like The Economist and US business magazines like Fortune that have tried to dissect the truth about his wealth and the financial challenges facing his businesses. But until now, before The Times’ lengthy exposé, no one has had real access to actual tax documents, the mother lode for insights into someone’s finances.
And what this new information has revealed is not pretty. Looking at more than a decade’s worth of tax documents, Times reporters found that through way-more-than-usually aggressive tax strategies, Trump paid no – zero, fokol – federal income taxes for many of those years, and for the 2016 and 2017 tax years, he paid $750 each year. By contrast, the average family in the US was paying rather more – around $12,000 a year, without being able to claim the status of multibillionaires. While the Mueller investigation into Russian election interference and the impeachment inquiry may have seemed rather distant from the daily concerns of many voters, that may be less likely to be true than the reality of a supposedly rich man shirking taxes by paying less than a part-time waitron might have to pay on their earnings.
The Times noted:
“Taxes on wealthy Americans have declined sharply over the past few decades, and many use loopholes to reduce their taxes below the 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 – that is, the most affluent 1/100,000th slice of the population – was 24.1 percent, according to the I.R.S.
“Over the past two decades, Mr. Trump has paid about $400 million less in combined federal income taxes than a very wealthy person who paid the average for that group each year.
“His tax avoidance also sets him apart from past presidents. Mr. Trump may be the wealthiest U.S. president in history. Yet he has 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 much more – in federal income taxes while in office.”
Commenting on this, James Hohmann wrote in the Daily 202 from PowerPost on Monday, “According to tax returns obtained by the New York Times for a story published Sunday evening, Trump himself paid nothing in federal income tax that year . Obama had reduced his tax burden for 2011 by donating $172,130 to 39 charities, and he said at the time that he believed he should be paying more in taxes.
“Trump reduced his tax burden to nothing by, among other things, claiming gargantuan losses on various investments. Trump paid no federal income taxes in 11 of 18 years that the Times obtained his confidential tax filings from. In 2017, after he took office, Trump’s tax bill was $750. It was the same in 2018.
“Attacking Obama for paying 20.5 percent of his income in taxes while paying nothing himself is just the latest illustration of Trump’s hypocrisy. He campaigns as a populist but governs as a plutocrat. Now the self-proclaimed billionaire seeks a four-year contract extension to lead a government which he has apparently contributed less tax revenue toward than many blue collar workers. Once again, Trump is showing himself to be the do-as-I-say, not-as-I-do president.”
Trump managed to reduce his tax burden by an enormous amount through the ultra-aggressive use of a real estate developer’s strategy of distributing those massive interest costs for real estate developments over future years where they could offset earnings. Yes, this may be a legal move for developers, but, in Trump’s case, in the process, he managed to claim a $72.9-million tax refund, one of the highest ever paid. And that particular refund is apparently now at the heart of his current tax audit (you know, the one Trump keeps citing as the reason he still can’t release his returns like all other modern presidents). The Internal Revenue Service seems interested in proving this refund had been obtained under false circumstances (a really major tax law no-no). And so, in response to all this, the IRS is now claiming they want $100-million for their troubles.
There are other fascinating, or horrifying, titbits of information we can glean from the Times’ revelations. One of these was that Trump claimed business expense deductions for $70,000 worth of hair care. Now that is a whole lot of special barbering, shaving, dyeing, ear wax removing, nose hair trimming, and whatever else a barber that expensive does for you. Yes, he was in show business and entertainers do like to look sharp, but $70,000 worth of looking sharp? That number, just by the way, is rather larger than the average annual family income in the US. Oh, and by the way, Ivanka Trump had her make-up and such paid for as well.
This, then, brings us to the matter of his vaunted business acumen. Analysis of his tax documents has revealed a large number of the apartment buildings, clubs, hotels and golf courses were actually far from thriving enterprises. They were, in fact, losing money at a great speed, and the only way to keep them afloat and in his control had been to transfer to their respective ledgers much of the revenue Trump had harvested through his role in The Apprentice television reality show.
The Times notes:
“Mr. Trump did face large tax bills after the initial success of ‘The Apprentice’ television show, but he erased most of these tax payments through a refund. Combined, Mr. Trump initially paid almost $95 million in federal income taxes over the 18 years. He later managed to recoup most of that money, with interest, by applying for and receiving a $72.9 million tax refund, starting in 2010.
“The refund reduced his total federal income tax bill between 2000 and 2017 to an annual average of $1.4 million. By comparison, the average American in the top .001 percent of earners paid about $25 million in federal income taxes each year over the same span.”
Of course, those splashy, signature casinos of his in Atlantic City had apparently long since slipped from his fingers through bankruptcy proceedings, even after gaining those hidden subsidies from his father’s resources. In effect, Trump has been a poor businessman masquerading as a really rich one on a television reality show in order to keep hold of the badly run business empire he had set up.
One issue is now bringing together that tax refund question and the legitimacy of the claim Trump had liquidated any financial stake in the casinos that he had used to underpin his claim of deep financial losses. As The Times explains:
“When applying for the refund, he cited a giant financial loss that may be related to the failure of his Atlantic City casinos. Publicly, he also claimed that he had fully surrendered 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.
“In 2011, the I.R.S. began an audit reviewing the legitimacy of the refund. Almost a decade later, the case remains unresolved, for unknown reasons, and could ultimately end up in federal court, where it could become a matter of public record.”
Along the way, too, in their exploration of these financial meanderings, the investigative journalists totalled it all up and it seems Trump owes something like $421-million – much of it signed for under his own name – that is coming due over the next four years. It is not clear from the records to whom, precisely, this money is owed, or the terms and conditions under which it was borrowed, but as has been reported elsewhere previously, much of his financing in recent years has come from the high net worth individuals’ private banking window of the Deutsche Bank, rather than its more standard commercial lending operations. Now, if Trump misstated his financial circumstances, there may be some legal reckoning to address here too.
Still left unclear is where all that money originally came from, and if there are any strings associated with it that may apply to this particular borrower. All these questions are leading to speculations about a myriad possible undisclosed conflicts of interest between these loans and the projects they underwrote, and the borrower’s current job, which must look to national interest, rather than the parochial ones of Trump’s financial stability.
Buried in these documents are numerous other intriguing bits. For one, his companies apparently paid his daughter Ivanka for consulting services to the tune of nearly $400,000, even as she was already an employee of the company. In addition, there are fees and commissions paid to foreign entities in several foreign countries, presumably for advancing various Trump projects. Depending on what they were supposed to achieve, and how, these kinds of payments can be just the kind of thing that attracts the attention of those responsible for policing the US’s Foreign Corrupt Practices statue, according to a lawyer friend in Washington.
There is much, much more, but as Washington Post columnist Greg Sargent observed of this expose, “…I’m talking about a scam that’s more fundamental to the Trumpist mystique. It’s the idea that someone with extensive inside experience in milking a system rigged to enrich elites like him is uniquely positioned to either (in the more charitable telling) un-rig that system for the benefit of all or (in the less charitable one) unlock its spoils for supporters who place him in a position of power to do so.
“The Times exposé strips the sheen off Trump’s image-making like so much imitation gold leaf. We learn that Trump evaded income taxes for many years largely through his epic financial losses. While Trump scooped in hundreds of millions of dollars off ‘The Apprentice,’ he dumped those profits into a series of big-league money losers that he owned and ran himself.”
Aside from the many possible questions of criminal culpability in all this by Trump and his family and their business minions that may be coming out of these revelations, what effect will it have on the election, now just a few weeks away? Unlike in many previous elections, it is assumed there are very few remaining undecided voters left among the population, although there may well be rather large numbers of people who may now become emboldened to vote, whereas they previously had been a cohort of persons eligible to vote who had chosen not to do so.
And how will these revelations play out in Tuesday’s debate? Nobody knows, and so we are all going to have to watch these things like hawks searching out their next prey.
And here you thought that after the pandemic, the economic crisis, the racial tumult, and the climate crisis and the West Coast fires, there couldn’t be anything else that could stir the pot any further for the election. Wrong! DM