On Sunday, the New York Times published a massive investigation into President Trump’s tax returns, revealing years of aggressive write-offs, tax avoidance, and staggering losses. The report comes at an inopportune time for a president facing an uphill reelection battle and a potential investigation for tax fraud by the Manhattan district attorney. It won’t be the last one, either: The Times notes that the report just “offers an overview of [their] findings; additional articles will be published in the coming weeks.”
Below are the most important takeaways from the Times’ reporting into Trump’s financial stress and expansive debt.
Trump paid $0 in federal income taxes in ten of the last 15 years
Though the president has claimed that he has nothing to hide in the tax returns that he has refused to release to the American public, he probably won’t be thrilled by the Times’ disclosure that he has paid no federal income tax in ten of the last 15 years — and only 11 times in the last 18 years. Trump reported losing more money than he made in the years he did not pay, a detail that undermines his already-spurious claim that he is a business guru.
Trump only paid $750 in taxes in 2016
President Trump paid only $750 in U.S. taxes in 2016, the year he ran for president, then paid the same paltry sum in the first year of his presidency. In addition, according to the Times, that seems to only have happened because “his accountants appear to have carved out an allowance for a small tax liability” in those years, since Trump had enough tax credits to owe no taxes at all. For a little context, Vox’s Dylan Matthews notes that “a single adult would only need to make $17,900” to pay $750 in federal income taxes.
The amount he paid in U.S. taxes in 2017 was also far less than his businesses paid to some other countries overseas. Per the Times, Trump’s companies paid more than $145,000 in taxes to India that year, more than $156,000 to the Philippines, and more than $15,000 to Panama.
As The Nation correspondent Jeet Heer notes, Trump’s 2016 tax responsibility was dwarfed by other concerns:
And here’s an interesting historical comparison:
Trump’s presidential bid may have been a ploy to bolster his flagging empire
As the Times points out, Trump decided to run for president in 2015 after — and perhaps, in part, because — his core businesses had reported more than $100 million in losses over the previous two years, or as the report put it, a point in which “the river of celebrity-driven income that had long buoyed [his businesses] was running dry.”
A new look at how Trump and his businesses may be profiting from his presidency
According to the Times, monthly credit-card receipts reported to the IRS by third-party firms point to how consumer interest in some of his companies spiked during his campaign and presidency. Cautioning that the data does not reveal total revenue, the Times reports that monthly receipts at the Trump International Hotel in Washington, D.C., “grew from $3.7 million in December 2016 shortly after it opened, to $5.4 million in January 2017 and $6 million by May 2018.”
In addition, credit-card revenue at Trump National Doral in Miami more than doubled over the three months after he announced his candidacy in 2015. Meanwhile profits at Mar-a-Lago (which has remained a profitable business for Trump) grew dramatically thanks to a significant influx of new members amid and after Trump’s presidential campaign. Notes the Times: “The membership rush allowed the president to take $26 million out of the business from 2015 through 2018, nearly triple the rate at which he had paid himself in the prior two years.” One-time payments for conferences at Trump National Doral also brought in millions from 2015 to 2018. And the Times highlights that rental income at the Trump-owned 40 Wall Street building in Manhattan has gone up considerably — by more than $12 million from 2014 to 2018.
There is also new data on the Trump businesses’ foreign income during his presidency:
The Times was also able to take the fullest measure to date of the president’s income from overseas, where he holds ultimate sway over American diplomacy. When he took office, Mr. Trump said he would pursue no new foreign deals as president. Even so, in his first two years in the White House, his revenue from abroad totaled $73 million. And while much of that money was from his golf properties in Scotland and Ireland, some came from licensing deals in countries with authoritarian-leaning leaders or thorny geopolitics — for example, $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
And as the Washington Post reiterated on Sunday night:
As Trump’s businesses struggled in recent years, they gained one new major customer: the U.S. government. Trump’s properties have received at least $1.1 million in payments from U.S. taxpayers since he took office, according to documents obtained by The Post.
Those documents show that Trump’s own actions caused much of this spending: the president has visited his properties more than 270 times, bringing along Secret Service agents and aides whose rooms were paid for by the government. The Trump Organization charged taxpayers rates as high as $650 per night for their rooms.
Trump wrote off $70,000 in haircuts as business expenses
As the Times politely frames it, “Mr. Trump classifies much of the spending on his personal lifestyle as the cost of business.” Perhaps the most egregious example of this trend is a $70,000 sum he spent on hair styling during The Apprentice, though more expensive examples include the cost of his aircraft and a nearly six-figure sum paid to one of Ivanka Trump’s favorite hair and makeup artists.
The IRS is auditing a $72.9 million tax refund
Because of the suspect ways he has reduced his tax responsibility, the Times reports that Trump is currently subject to an Internal Revenue Service audit of a $72.9 million tax refund. According to the investigation, Trump claimed a total loss from one of his disastrous casinos, despite getting a 5 percent stake in the company that emerged from the bankruptcy. Since federal law dictates that investors can only claim such a loss if they get nothing in return, the whole tax refund — which largely canceled out the $95 million in federal income taxes he did pay over the last 18 years — could be in jeopardy:
In 2011, the IRS 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.
A show about being rich saved him from going broke
On Monday, the Times provided the first of its follow-up reports into the president’s financial woes, depicting how The Apprentice saved Trump from even more serious financial trouble. Trump’s tax returns show that he made $197 million directly from the show and leveraged that cash to make an additional $230 million from his celebrity:
The show’s big ratings meant that everyone wanted a piece of the Trump brand, and he grabbed at the opportunity to rent it out. There was $500,000 to pitch Double Stuf Oreos, another half-million to sell Domino’s Pizza and $850,000 to push laundry detergent …
Mr. Trump was not terribly discriminating in his choice of endorsements. He slapped his name on everything from steaks and vodka to a board game and cologne. For the benefit of “consumers interested in experiencing the Trump lifestyle at an affordable price,” as a news release put it, he signed a licensing deal with the Serta mattress company that eventually netted him more than $15 million. Another $15 million would pour in from Trump neckties, shirts and underwear by clothiers like Phillips-Van Heusen.
No endorsement was too small. Warner Music paid $100,000 to feature Mr. Trump in a collection of cellphone ringtones, with the Donald uttering phrases like, “You’re getting a phone call, and believe me, it better be important. I have no time for small talk, and neither do you.”
Trump’s golf courses are big losers, and lost him much of his Apprentice fortune
The Times reports that since 2000, Trump has reported losing more than $315 million at his family’s golf courses, particularly after his post-Apprentice golf-course buying spree, which resulted in the Trump organization owning 15 golf courses by the end of 2015, up from two before the premiere of The Apprentice (and all the clout his newfound reality-TV stardom afforded him).
The majority of the losses came from the Trump National Doral resort in Miami, which he bought for $150 million in 2012 — and where he attempted a cash injection last year by proposing the G7 be held there. By 2018, despite putting $213 million into that resort, Trump had reported losses from it totally more than $162 million. Trump also reported a total of $63.6 million in losses from his family’s three European golf courses (two in Scotland, one in Ireland).Furthermore, while Trump has tried to explain that his businesses’ extensive losses aren’t as bad as they seem due to depreciation:
[T]he tax records for Mr. Trump’s businesses show, however, is that he has lost chunks of his fortune even before depreciation is figured in. The three European golf courses, the Washington hotel, Doral and Trump Corporation reported losing a total of $150.3 million from 2010 through 2018, without including depreciation as an expense.
Trump’s debt is massive, and will soon get worse
While it’s been previously reported that the president owes Deutsche Bank hundreds of millions of dollars, the investigation reveals the ensuing crisis if the president wins reelection and tries to avoid the $421 million in loans he is personally responsible for, loans which are coming due within the next four years. If Trump is president in that time, one can only wonder how he’d use the federal government as a defense against any lenders who choose to foreclose on him.
But as New York’s Josh Barro noted last year, when the Times detailed how Trump reported over $1 billion in losses from 1985 to 1994, it’s quite possible that he did not actually lose all that money, but rather claimed “credit on his taxes for losses actually borne by other people or entities, such as banks that loaned money to him or his businesses and did not get paid back in full.”
It’s now easy to visualize Trump’s failure at business
There’s new evidence about how big a stiffer Trump is
Per the report, Trump’s tax records reveal that he has failed to pay back a whopping $287 million to his lenders since 2010. So much for the record of the self-described “king of debt.”
Has Ivanka Trump received consulting fees that were deducted as businesses expenses?
The Times reports that Trump wrote off about $26 million in “unexplained ‘consulting fees’” from 2010 to 2018, and notes that there is evidence that in at least one instance, one of those unnamed consultants may have been his daughter, Ivanka Trump.
The “consultants” are not identified in the tax records. But evidence of this arrangement was gleaned by comparing the confidential tax records to the financial disclosures Ivanka Trump filed when she joined the White House staff in 2017. Ms. Trump reported receiving payments from a consulting company she co-owned, totaling $747,622, that exactly matched consulting fees claimed as tax deductions by the Trump Organization for hotel projects in Vancouver and Hawaii.
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.
The shady Seven Springs write-offs
The Times report highlights Trump’s Seven Springs estate in New York’s Westchester County as his “most generous interpretation of the business expense write-off.” Per his records, Trump claimed a $21.1 million charitable tax deduction after signing a land conservancy deal pledging not to develop the property (after his earlier efforts to do that were blocked by local residents). He also classified the estate as an investment property in 2014 to allow him to since claim $2.2 million in property taxes as a business expense — but Seven Springs does not appear to fit the criteria for an investment property, since the Trumps openly say they use the estate as a retreat (Eric Trump once referred to it as “our compound”), and they do not appear to have made any efforts to make any income off of it.
Furthermore, the conservation easement deductions Trump claimed for Seven Springs and another property in Los Angeles have drawn legal scrutiny:
While his use of these deductions [on a total of four properties] is widely known, his tax records show that they represent the lion’s share of his charitable giving — about $119.3 million of roughly $130 million in personal and corporate charitable contributions reported to the I.R.S.
Two of those deductions — at Seven Springs and at the Trump National Golf Club in Los Angeles — are the focus of an investigation by the New York attorney general, who is examining whether the appraisals on the land, and therefore the tax deductions, were inflated.
Trump’s (predictable) response to the Times report
“It’s totally fake news. Made up, fake,” Trump responded on Sunday night when asked about the bombshell Times report, and specifically him paying only hundreds of dollars a year in taxes. He suggested the Times was trying to damage him politically, once again claimed he was under audit, and complained that was because “the IRS treats me very badly.”
Trump also noted, without providing any specific details, that he has “paid a lot in state income taxes, too”:
Trump then tweeted a similar, even more misleading defense on Monday morning.
It’s worth noting:
Trump-friendly media, meanwhile, has also responded in a predictable way, as CNN’s Oliver Darcy pointed out on Sunday night:
Anytime there is a big story in the news that Fox News has to cover on its supposed ‘straight news’ programs, the network does so by leading with Trump’s denial. Sunday evening was no different. The headline on Fox’s website focused solely on Trump’s denial and bashing of NYT. Elsewhere in right-wing media, some homed in on the line from NYT’s story that said the documents it obtained do not ‘reveal any previously unreported connections to Russia.’ Expect these to be the angles the pro-Trump media takes in the next 24 hours…
How might the investigation change the 2020 race?
Considering that the president’s approval ratings have remained in the 40-point ballpark for the entirety of his presidency, it’s unclear how much the investigation will impact his reelection campaign, though as Jill Colvin notes at the Associated Press, “the tax allegations go to the very heart of Trump’s appeal, especially among the blue-collar voters in states like Pennsylvania, Wisconsin and Michigan who propelled him to the presidency in 2016,” and Trump supporters continue to cite his so-called business world success as one of the main reasons they back him.
Meanwhile, the Biden-Harris campaign is already fundraising off the news with stickers that say “I Paid More Income Taxes Than Donald Trump,” and it released an ad on Sunday night highlighting representative examples of that. The president’s taxes will now undoubtedly be a major additional focus in the first Trump-Biden debate on Tuesday night, as well.
Trump’s financial curiosities could also encourage the parties investigating the president’s tax returns to intensify their efforts — or encourage House Democrats to open an inquiry into the international creditors Trump owes money to. And it could spur Democrats to further empower the IRS to pursue the billions that the federal government loses to legal tax evasion by the ultrarich every year:
This post has been updated throughout to include more details and analysis.