A big exposé of Trump's taxes
The TLDR: The US President has steadfastly refused to release his tax returns ever since he ran for office back in 2016. New York Times finally got its hands on his tax filings from the past 18 years. They reveal, in sum: He paid next-to-zero taxes, used seriously dodgy methods to reduce his tax bill, is in serious debt that is coming due very soon and received lots of money from foreign sources—including India.
Will this dent his election prospects? No, not with his bhakts. Yes, if a lot of disgusted Republicans decide to just not vote this time around.
A brief history of Trump’s taxes
The tradition: Ever since the mid-1970s, US presidential candidates have released their taxes when they run for office. It’s a tradition, not a legal requirement. The reason: Voters should know that there are no financial question marks about their president—who can shape policy and affect the stock market.
Trump’s big move: When he announced his candidacy in 2016, Trump first kept promising to release his tax returns—which he called “very big” and “beautiful”—but never delivered. He claimed that he could not legally release the information because he is being audited by the Internal Revenue Service—which is a lie. More recently, the US Congress and New York State officials have gone to court to demand the release of his financial information. Trump has fought hard to block them in each of these cases.
The exposé: For years, media organisations have been working hard to get a hold of his tax returns. New York Times has finally netted the great white whale:
“The New York Times has obtained tax-return data extending over more than two decades for Mr. Trump and the hundreds of companies that make up his business organization, including detailed information from his first two years in office. It does not include his personal returns for 2018 or 2019.”
Point to note: This is the information that Trump himself submitted to tax authorities.
The high/lowlights of NYT’s findings
Zero taxes: Trump paid exactly nada in federal income tax for 11 out of 18 years. In 2017—after he took office—he paid exactly $750. Point to note: Barack Obama and George W Bush each regularly paid more than $100,000 a year.
The big-ass tax audit: Trump is indeed being audited for $72.9 million he claimed as a refund in 2010. This includes all the federal income tax he had paid between 2005 and 2008, plus interest. The audit has dragged on for years because it is stuck in a congressional committee with both Republicans and Democrats. And it may well end up in court—and if Trump loses, he will owe the US government $100 million (including interest).
Dodgy deductions: Trump reduced his tax bills by claiming a number of personal expenses as deductions. Examples: lavish homes, private aircraft and $70,000 in hairstyling for television.
The ‘Ivanka’ dodge: $26 million in unidentified “consulting fees.” Who received these fees? “Mr. Trump reduced his taxable income by treating a family member as a consultant, and then deducting the fee as a cost of doing business.” The family member: Ivanka Trump. And that’s a problem because:
“Ms. Trump had been an executive officer of the Trump companies that received profits from and paid the consulting fees for both projects—meaning she appears to have been treated as a consultant on the same hotel deals that she helped manage as part of her job at her father’s business.”
In other words, she was both an employee and consultant for the same company and on the same deal.
Bleeding money: For all his tall claims of being a successful businessman, Trump has been hemorrhaging millions on all his marquee businesses—ranging from golf resorts to hotels. The only money he’s ever made is from the TV show ‘The Apprentice’ ($427.4 million)—and much of it has been ploughed into his losing businesses.
Point to note: These staggering losses also helped Trump avoid paying taxes for all these years.
In serious debt: Trump personally owes a lot of money, and those bills will come due very soon:
“In the 1990s, Mr Trump nearly ruined himself by personally guaranteeing hundreds of millions of dollars in loans, and he has since said that he regretted doing so. But he has taken the same step again, his tax records show. He appears to be responsible for loans totaling $421m, most of which is coming due within four years.
Should he win re-election, his lenders could be placed in the unprecedented position of weighing whether to foreclose on a sitting president.”
Foreign sources: As The Guardian notes, the big red flag is the amount of money Trump has received from his foreign operations. This is all the more alarming given his tendency to treat the White House as just another means to promote his business:
“In his first two years as president, Trump received $73m from foreign operations, including $3m from the Philippines, $2.3m from India and $1m from Turkey. In 2017 he paid $145,400 in taxes in India and $156,824 in the Philippines—but just $750 in the US.
The president has been notoriously outspoken in his praise for the leaders of Philippines, India and Turkey. Does Trump’s substantial income from abroad conflict with his responsibilities as president? Did he put his personal interest ahead of the American people? Did he break the law?”
Will it make a difference?
Yes and no.
The Trump bhakts: are unlikely to care very much—especially since the source is a liberal publication like New York Times. He has done an excellent job of consistently attacking the credibility of mainstream news outlets among his supporters—many of whom have assaulted and intimidated reporters at his rallies. Trump has already dismissed the story as “fake news.” But there is a chance that these revelations will dent his glamorous image as a high-flying businessman—which is key to his appeal.
The other Republicans: US elections are often determined by turnout, i.e. which party can get their voters to come out in big numbers. This is going to be especially critical during the pandemic—when getting people to vote in person will be key to declaring a winner on election day. Democrats are already energized and enraged by the Republican move to appoint a replacement to the recently deceased Supreme Court Justice Ruth Bader Ginsburg—just months before an election. Trump is in trouble if middle-of-the-road Republicans decide to stay home instead.
Controlling the coverage: Trump’s great genius lies in his ability to drive news coverage. Often, all it takes is a series of outrageous tweets. But New York Times claims this is just the first installment of a series of big investigative stories. So it will be difficult for Trump to get other news outlets to shift focus. A steady drip of unflattering revelations can do more damage than one big scoop. As one Republican analyst points out:
"Donald Trump needs this election to be about Joe Biden as a choice. This keeps the focus squarely on Trump's character and the chaos going into the most important night of the campaign, the debate."
The bottomline: Trump has dodged everything thrown his way—from charges of sexual assault to collusion with foreign powers. It remains to be seen if his taxes will be the magic bullet.
Reading list
Check out the big New York Times investigation, or NYT’s summary of its findings, and a handy timeline. The Guardian and the Associated Press look at whether the report will sink Trump. Vox explains why these revelations are embarrassing for Trump. Also check out: Vox’s explainer on the battle over Trump’s taxes. NBC News has the political fallout, including Trump’s response.