ADVERTISEMENTREMOVE AD

Minimal Tax Paid, Huge Business Losses: NYT Exposes Trump Returns

Long-hidden tax returns suggest his presidential bid may have been because of serious financial troubles.

Published
World
7 min read
story-hero-img
i
Aa
Aa
Small
Aa
Medium
Aa
Large
Hindi Female

In 2016, the year he won the US Presidency, Donald Trump paid USD 750 in federal income tax. In the first year of his presidency, he paid the same amount. In 10 of the previous 15 years, he paid no income tax at all.

This is the headline revelation from The New York Times’ explosive expose on 27 September of Trump’s own tax returns, which he has long kept hidden, unlike pretty much every other presidential candidate in recent US history. But the minimal tax paid by Trump is only the tip of the iceberg of an investigation which the Republican president has, unsurprisingly, derided as “fake news” without any actual rebuttals.

Democrat member of the House of Representatives, Bill Pascrell, who has been at the forefront of the US Congress efforts to get Trump to release his tax returns since 2015, told the Washington Post that the revelations, “confirm that while he campaigned as a so-called brilliant financial wizard, Trump is a cheat, a fraud, and perhaps the worst businessman in the world.”

So what does the report reveal?

ADVERTISEMENTREMOVE AD

HOW MUCH INCOME TAX HAS TRUMP PAID?

The NYT accessed 18 years of Trump’s federal income tax returns, from 2000 to 2017, provided to the US Internal Revenue Service (IRS). This does not cover any taxes paid to a state government.

In 11 of those 18 years, he paid no income tax. In 2016 and 2017, he paid only USD 750. Over the course of the remaining years, he paid almost USD 95 million, but applied for and received a USD 72.9 million tax refund, starting in 2010.

HOW DID TRUMP PAY SO LITTLE IN TAXES AND GET SUCH A HUGE REFUND?

Trump consistently claims to enjoy the lifestyle of a billionaire, and makes extravagant claims about how much money he makes, which was a key part of his pitch to become President four years ago. On that basis, one might imagine he would pay a lot more tax.

However, he has reduced his federal tax bill over the years, including by obtaining the massive USD 72.9 million refund, by claiming various tax deductions for ‘business expenses’ as well as business losses.

0

IS THIS LEGAL?

Using business expenses as a way of reducing the level of one’s taxable income is not illegal, and is a widely used method to the tax bill for wealthy people in the US and other countries. However, some of the deductions claimed by Trump are extremely suspect.

Listed among his ‘business expenses’ are deductions for what appear to be personal expenses, including:

  • terming properties like his Westchester estate, which his sons have used as a residence, as business properties;
  • usage of his aircraft to travel between his homes as a business expense
  • USD 70,000 for hairstyling (during his time as host of the reality TV show The Apprentice).

Some of the most questionable expenses are towards ‘consulting fees’. This is a legitimate deduction to claim in theory, but the NYT reports that “Across nearly all of his projects, Mr. Trump’s companies set aside about 20 percent of income for unexplained ‘consulting fees.’”

These appear to include fees to consulting companies owned by his daughter, Ivanka Trump, at a time when she was a top executive in the Trump Organization. A consulting fee of USD 747,622 paid to an unnamed consultant for certain Trump hotel projects was matched by an identical payment received by one of Ivanka’s companies in 2017.

ADVERTISEMENTREMOVE AD

ARE THE US TAX AUTHORITIES INVESTIGATING TRUMP FOR ANY OF THIS?

The IRS has been auditing Trump’s federal income tax records since 2011. This relates to the massive refund of USD 72.9 million that Trump claimed the year before.

When claiming the refund, the NYT reports that Trump “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.” The amount in question? A USD 700 million business loss.

However, to claim this refund under US federal law, Trump would have to have received nothing in return – instead he appears to have got a 5 percent stake in the new casino company which took over the loss-making investments.

While the IRS audit has not yet been completed, “for unknown reasons”, Trump has often cited this very audit as the reason he cannot release his tax returns. This is not actually true.

In the meanwhile, the IRS audit, which appeared to have been settled in 2014, grew to include a review of Trump’s returns to 2013.

ADVERTISEMENTREMOVE AD

ARE TRUMP’S BUSINESSES REALLY DOING THAT WELL IF HE IS CLAIMING BUSINESS LOSSES?

Trump uses the business losses made by some of the entities in the Trump Organization to offset the gains made elsewhere, particularly the large earnings that Trump makes off his image – USD 424.7 million from 2004 to 2018 – and those from his flagship Trump Tower in New York (USD 336.3 million since 2000).

Trump has used a particular method of tax planning to carry forward several business losses from previous years to use to offset profits made later – in particular losses made in the early 1990s that he used up till 2005.

However, the numbers show that he has been making major losses in the businesses that are supposed to be the key to his real estate business empire: his golf courses and his hotels. For instance, since 2000, he has lost more than USD 315 million on the golf courses, while his Washington hotel, a converted US post office building, has lost more than USD 55 million.

Trump has failed to repay lenders USD 287 million since 2010, but avoided any tax liability on this by striking a deal to reduce the deductions he could claim for future business losses. However, he has been able to offset the effects of this as well, by using a provision in the bailout given to businesses in the aftermath of the 2008 ‘Great Recession’.

ADVERTISEMENTREMOVE AD

ARE TRUMP’S FINANCIAL TROUBLES THE REASON BEHIND HIS RUN FOR THE PRESIDENCY?

While Trump’s earnings were majorly helped by revenue from The Apprentice, the losses he was making in many of his businesses meant that his financial condition in 2015 was poor. “In 2012, he took out a $100 million mortgage on the commercial space in Trump Tower,” the NYT reports. “He has also sold hundreds of millions worth of stock and bonds. But his financial records indicate that he may have as little as $873,000 left to sell.”

The USD 100 million mortgage is due in 2022, and if he loses that fight with the IRS over the huge tax refund, he could end up owing the US government over USD 100 million. He has also offered personal guarantees for huge loans for himself and his businesses – reportedly totaling USD 421 million at present. Much like Vijay Mallya and Anil Ambani, this could prove a major blow to his finances when these loans come due.

If he were to win the election in 2020, however, this would put him in charge of the very government which he might owe tax liabilities to, and put lenders whom he has to repay in an extremely uncomfortable position.

ADVERTISEMENTREMOVE AD

DO THE TAX RETURNS REVEAL ANY CONNECTIONS WITH RUSSIA?

There have been many questions about Trump’s financial ties to Russia, but the tax returns do not reveal any previously unknown financial connection to them. However, the returns “did shed new light on the money behind the 2013 Miss Universe pageant in Moscow, a subject of enduring intrigue because of subsequent investigations into Russia’s interference in the 2016 election.”

The NYT reports that this pageant twas the most profitable one during Trump’s time as a co-owner of the event, bringing in USD 2.3 million for Trump personally. At least part of this was financed by the Aglarov family, who were reportedly involved in setting up a 2016 meeting between Trump campaign officials and a Russian lawyer connected with the Kremlin where the Donald Trump Jr sought help on getting “dirt” about Hillary Clinton.

DO THE TAX RETURNS SHOW ANY CONFLICT OF INTEREST BETWEEN TRUMP BUSINESSES AND THE PRESIDENCY?

The NYT Reports that Trump has “received large amounts of money from lobbyists, politicians and foreign officials who pay to stay at his properties or join his clubs” since he became a presidential candidate. These include an additional USD 5 million a year from membership fees at his Mar-a-Lago club in Florida.

The NYT also reports that “In his first two years in the White House, Mr. 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.” Questions of conflicts of interest arise from these deals, given the fact that those involved in setting up many of these deals, in the Philippines and Argentina, for example, have been appointed to government posts in those countries.

ADVERTISEMENTREMOVE AD

HOW HAS TRUMP RESPONDED TO THE NYT REPORT?

In a news briefing at the White House on Sunday, 27 September, Trump termed the NYT report “fake news”. “I've paid a lot, and I paid a lot in state income taxes, too," Trump replied. "New York state charges a lot. And I've paid a lot of money in state [taxes]”, Trump said.

This echoes the responses given by Alan Garten, a lawyer for the Trump Organization, in response to a letter from the NYT before publication. Garten said that “most, if not all” the facts in the NYT report were inaccurate, and asked fro the documents accessed by the newspaper.

After the NYT refused to provide the records (so as to protect its sources), Garten offered a limited rebuttal, including this statement:

“Over the past decade, President Trump has paid tens of millions of dollars in personal taxes to the federal government, including paying millions in personal taxes since announcing his candidacy in 2015.”

The NYT argues that Garten is conflating income tax with other federal taxes that Trump has paid over the years, like Social Security.

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

Read Latest News and Breaking News at The Quint, browse for more from news and world

Topics:  donald trump 

Speaking truth to power requires allies like you.
Become a Member
3 months
12 months
12 months
Check Member Benefits
Read More
×
×