A New York Times report that President Donald Trump paid just $750 in federal income tax the year he entered the White House — and, thanks to colossal losses, no income tax at all in 11 of the 18 years that the Times reviewed — is raising doubts about President Trump’s self-image as a shrewd and successful businessman.
That Sunday’s report came just weeks before Mr. Trump’s re-election bid served to intensify the spotlight on Mr. Trump the businessman — an identity that he has spent decades cultivating and that helped him capture the presidency four years ago in his first run for political office. The Times’ report deepens the uncertainty surrounding a tumultuous presidential campaign set against the backdrop of a viral pandemic, racial unrest in American cities and a ferocious battle over the Supreme Court seat left vacant by the death of Justice Ruth Bader Ginsburg.
“First of all, I paid a lot and I paid a lot of state income taxes, too.” Mr. Trump said at a Sunday news conference. “New York State charges a lot and I paid a lot of money in state. It will all be revealed.”
The New York Times report focused on federal tax returns, not state returns. Mr. Trump didn’t disclose how much he paid in either federal or state income taxes.
Breaking tradition
Since entering the White House, Mr. Trump has broken with tradition set by his predecessors by not only refusing to release his tax returns but by waging a legal battle to keep them hidden. The Times report suggests why that might have been so. It reported that many of Mr. Trump’s top businesses are losing money, losses that have helped him shrink his federal tax bill to essentially nothing.
Eugene Steuerle, a tax expert at the Urban Institute, said he wasn’t surprised that it turns out that Mr. Trump had paid almost no federal income tax. Most commercial real estate developers deduct large interest payments on their debts from taxable income, thereby lowering their tax bills. Typically, they also often avoid capital gains taxes by plowing profits from the sale of one building into the purchase of another.
“Most tax experts expected you would find little in the way of tax payments by President Trump,” said Steuerle, who served as a Treasury Department official under President Ronald Reagan.
The Times noted that Alan Garten, a lawyer for the Trump Organization, said of the Times report that “most, if not all, of the facts appear to be inaccurate” and asked for the documents on which the reporting was based, which the Times declined to provide in order to protect its sources. The Times said Garten then directly disputed only the amount of taxes Mr. Trump had paid.
Here are seven key takeaways from the Times’ reporting:
1. Trump paid $750 in taxes in both 2016 and 2017
The newspaper said Mr. Trump initially paid $95 million in taxes over the 18 years it studied. But he managed to recover most of that money by claiming — and receiving — a stunning $72.9 million federal tax refund. According to the Times, Mr. Trump also pocketed $21.2 million in state and local refunds, which are typically based on federal filings.
Mr. Trump’s outsize refund became the subject of a now-long-standing Internal Revenue Service audit of his finances. The audit was widely known. Trump has claimed it was the very reason why he cannot release his returns. But the Times report is the first to identify the issue that was mainly in dispute.
As a result of the refund, Mr. Trump paid an annual average $1.4 million in federal taxes from 2000 to 2017, the Times reported. By contrast, the average U.S. taxpayer in the top .001% of earners paid about $25 million annually over the same time frame.
His tax returns also reveal that he’s failed to repay $287 million to his lenders since 2010, which the Times says is far more than previously known. While the IRS treats forgiven debt as income, Mr. Trump avoided paying taxes on much of that money through tax maneuvers.
2. A lavish lifestyle through business expenses
From his homes, his aircraft — and $70,000 on hair styling during his television show “The Apprentice” — Trump has capitalized on cost incurred from his businesses to finance a luxurious lifestyle.
The Times noted that Mr. Trump’s homes, planes and golf courses are part of the Trump family business and, as such, Trump classified them as business expenses as well. Because companies can write off business expenses as deductions, all such expenses have helped reduce Trump’s tax liability.
Mr. Trump’s Seven Springs estate in Westchester County, New York is a 50,000-square-foot mansion set on more than 200 acres. But because he classifies it as an investment property, Mr. Trump is able to write off the estate’s $2.2 million in property taxes as a business expense. Eric Trump, one of Mr. Trump’s sons, has described the property as “home base for us for a long, long time,” while the Trump Organization describes the property as a “retreat” for the Trump family.
At the same time, the tax overhaul signed into law by Mr. Trump in 2017 limits taxpayers to $10,000 in deductions for state and local taxes, which includes property taxes.
3. Some of his best-known businesses lose millions
The president has frequently pointed to his far-flung hotels, golf courses and resorts as evidence of his success as a developer and businessman. Yet these properties have been hemorrhaging money.
The Times reported that Mr. Trump has claimed $315 million in losses since 2000 on his golf courses, including the Trump National Doral near Miami, which Mr. Trump has portrayed as a crown jewel in his business empire. Likewise, his Trump International Hotel in Washington has lost $55 million, the Times reported.
4. Foreign visitors help support Trump properties
Since Mr. Trump began his presidential run, lobbyists, foreign governments and politicians have lavished significant sums of money on his properties, a spending spree that raised questions about its propriety and legality.
The Times report illustrates just how much that spending has been: Since 2015, his Mar-a-Lago resort in Florida has taken in $5 million more a year from a surge in membership. The Billy Graham Evangelistic Association spent at least $397,602 in 2017 at Trump’s Washington hotel. Overseas projects have produced millions more for Mr. Trump — $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
5. He may have paid family members in “consulting fees”
Mr. Trump wrote off about $26 million in unexplained “consulting fees” as a business expense across many of his projects, the New York Times reported.
While the “consultants” aren’t identified on the tax returns, the consulting fees claimed as tax deductions in some cases match exactly what Ivanka Trump claimed as income in her financial disclosures. For instance, Ivanka Trump reported receiving $747,622 in payments from a consulting company she co-owned, the same amount that Mr. Trump claimed as a tax deduction for two hotel projects.
At the same time Ivanka Trump was an executive officer of the Trump companies, she both profited from the hotels and the consulting fees, the Times story noted. The IRS in the past has pursued penalties against some companies that have sought to avoid taxes by paying consulting fees to people who weren’t, in fact, independent contractors, the report noted.
The maneuver helps companies sidestep payroll taxes, noted the Institute on Taxation and Economic Policy.
6. Trump’s lucrative licensing revenue has dwindled
Mr. Trump earned $427.4 million from his reality show “The Apprentice” from 2010 to 2018, as well as from licensing deals from everything from clothing to mattress companies. But that revenue started to dry up when he ran for president and made derogatory comments about immigrants, which cost him two of his most lucrative deals along with tens of millions in revenue from the Miss Universe pageant which NBC announced it would no longer broadcast.
Indeed, Mr. Trump’s brand appears to be the most successful part of his business. During the same period the “The Apprentice” was on the air, the businesses that Mr. Trump ran lost almost $175 million, the Times reported.
7. Trump’s debt load is coming due
Mr. Trump seems sure to face heavy financial pressures from the enormous pile of debt he has absorbed. The Times said the president appears to be responsible for $421 million in loans, most of which will come due within four years. On top of that, a $100 million mortgage on Trump Tower in New York will come due in 2022.
See original article at CBS News
