5 takeaways from the New York Times report on Trump’s tax returns
A blockbuster New York Times report that President 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 — serves to raise doubts about Trump’s self-image as a shrewd and successful businessman.
Since entering the White House, 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 New York Times report Sunday suggests why that might have been so. It showed that many of Trump’s top businesses are losing money, even as those losses have helped him shrink his federal tax bill to essentially nothing.
Eugene Steuerle, a tax expert at the Urban Institute and a Treasury Department official under President Reagan, said he wasn’t surprised by the revelation that 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.
The Times noted that Alan Garten, a lawyer for the Trump Organization, said of the 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 Trump had paid.
Here are five key takeaways from the report:
Trump paid just $750 in taxes in 2016 and 2017
The newspaper said 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, Trump also pocketed $21.2 million in state and local refunds, which are typically based on federal filings.
President Trump claimed he had immunity from subpoenas that required his accountants to turn over his financial records to Congress and a grand jury.
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 said it was the reason why he cannot release his returns, but the Times report is the first to identify the main issue in dispute.
As a result of the refund, Trump paid an average $1.4 million in federal taxes from 2000 to 2017, the Times reported. By contrast, the average U.S. taxpayer in the top 0.001% of earners paid about $25 million annually over the same period.
Trump has financed an extravagant lifestyle with the use of business expenses
From his homes, his aircraft and $70,000 on hair-styling for his appearances on the television show “The Apprentice,” Trump has capitalized on costs incurred from his businesses to finance a luxurious lifestyle.
The Times noted that 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.
Many of his best-known businesses are money-losers
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 been draining money.
The Times reported that Trump has claimed $315 million in losses since 2000 on his golf courses, including the Trump National Doral near Miami, which 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.
Foreign visitors have helped support Trump’s properties
Since Trump began his presidential run, lobbyists, foreign governments and politicians have lavished significant sums of money on his properties, a spending spree that raises 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 Assn. spent at least $397,602 in 2017 at Trump’s Washington hotel. Overseas projects have produced millions more for Trump — $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
Trump will face financial pressure as debts come due
Trump seems sure to face heavy financial pressures from the enormous pile of debt he has built up. 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.
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