On September 27, 2020 the New York Times released a bombshell report stating that President Donald Trump only paid $750 in income tax the year he won the presidential election and another $750 during the first year of his presidency. In fact, Trump has paid almost no federal income taxes in ten of the last fifteen years. Trump was capable of paying less in federal income taxes than school teachers, nurses, service members and first responders because he reports a history of chronic losses on various businesses.
The Chronic Losses of a Failed Businessman
When on the campaign trail in 2016, Trump and his supporters were adamant that he would “Make America Great Again” because of his excellent track record as a businessman. Trump claimed he took a “small” loan of a million dollars and turned it into a great business empire. In reality, Donald Trump received more than $400 million dollars from his father and an additional loan from his father of $60 million. According to Forbes, Trump’s current net worth is $2.5 billion. Although it is true that Trump has grown the money given to him from his father, Trump would have made more money if he simply invested his money in an S&P 500 Index fund and done nothing. Instead, Trump has had some great success in real estate since the 1980s but also many failed business ventures, and it’s estimated that Trump is over $400 million in debt as well.
Defenders of Trump quickly claimed that the president paying less in taxes than others with far less wealth indicates that he is an adept businessman who is simply taking advantage of the tax code. Other Trump supporters go one step further and blame the Obama Administration. Business losses can be used by shrewd accountants to make sure their clients pay less in taxes. The multiple failing businesses of Trump were given an even bigger tax break when President Obama signed a bill in response to the Great Recession. The bill allows business owners to receive full refunds for losses in the past four years and 50 percent for losses before that. The bill signed into law by Obama was meant to assist financially struggling businesses recover from the Great Recession, but it has allowed billionaires like Trump to take advantage of the tax code and pay little to no income tax.
The New York Times reports that the president’s many failing businesses have allowed him to pay very little in income taxes, but they are not the only source of tax evasion for the president. Trump has hired his children as “consultants” in order to evade both income taxes and the wealth tax. On top of that, he has a history of writing off frivolous spending as business expenses. For example, the president’s hair styling was a $70,000 tax write off, and Ivanka Trump’s hair and makeup was a $95,000 write off when they were filming his hit reality television show “The Apprentice.”
In 2014, Trump was asked whether or not he would release his tax returns if he ran for president and he stated, “I would love to do that.” Releasing tax returns before running for the highest office in the country is not mandatory for candidates; however, it has been the precedent since 1970. The Providence Journal reported in 1970 that Richard M. Nixon paid less than $800 on an income of about $200,000 because he took a charitable deduction for donating his Presidential Papers. This caused an uproar to the point that every president since Nixon has willingly released their tax returns before the election except Donald Trump. Despite claiming he would release the tax return in the past, the president has also repeatedly stated that his tax return is very “big” and “beautiful,” but he’s constantly under a “routine” audit from the IRS. According to Trump, the routine audit has caused him to be unable to release the tax return.
The Dangers of Government Officials Having Debt
The tax returns obtained by The New York Times shows that the president has about $421 million in debt and that most of the debt is due in four years. When applying for many government positions, people with large amounts of debt are immediately disqualified from the hiring process. This is because lenders of the debt can have great influence on the person in debt. If a person in debt holds power in government, then the lender might be able to coerce them into favors. Although restrictions on debtors exist for bureaucrats, elected officials are not subjected to the same scrutiny. Trump’s debt creates a significant conflict of interest, and many point to his connections to Wall Street and Russia as areas of concern. For example, Trump claimed as a presidential candidate that he wanted to “drain the swamp,” but he appointed former Goldman Sachs executive Steve Mnuchin to Secretary of the Treasury. Mnuchin has been accused of misappropriating funding during the COVID-19 crisis in a manner that favors large corporations. Other critics of Trump have pointed to his connections to debt in Moscow.
In 2016, Trump ran on the message that he is a successful businessman, so he should be President. Trump’s supporters claim that he is a very smart man who knows the tax code well. In reality, Trump cannot be considered a good businessman and a good tax evader at the same time. If the New York Times’ source on the tax return is credible, then Trump has been a failed businessman for the past fifteen years.