This weekend, The New York Times published bombshell revelations from President Donald Trump's long-hidden tax filings, after he refused to release them for years. The documents show the means that the president has taken to avoid paying taxes, and the questionable sources of much of his income. The findings are so dense and complex, they are difficult to summarize.
Trump has a reputation as an entrepreneur, built mostly on his personal brand through TV shows, books and other media. However, the newly-obtained documents by the Times reveal that many of his most well-known businesses routinely lose money, and his success rate in business is low. At the same time, the president has paid far less in income taxes over the last two decades than the average American. In fact, in 11 out of the 18 years the filings describe, Trump paid no federal income taxes at all.
Other revelations in the report are wide-ranging in their specificity and relevance to the Trump presidency. Many pundits point out that this report is as much an indictment of federal tax code as it is of Trump personally. However, the Times did compare his finances to other millionaires in order to put them in context.
Whether Trump's taxes have an impact on his presidency or the 2020 presidential election remains to be seen, but there are some key takeaways that Americans should be aware of. Here is a look at the biggest points from Trump's tax filings.
Foreign Income & Presidential Income
Trump's finances have become more much stable since he became the leading presidential candidate for the Republican party in 2016, thanks largely to income he could only have gotten as a candidate and then as the president. This is because Trump hosts events at his private hotels or clubs, then charges lobbyists, other politicians and even foreign officials to stay there.
Analysts found that Trump has made an additional $5 million per year from his Mar-a-Lago club in Florida since taking the presidency — a private property that he still refers to as the "Southern White House." He has made similar profits at other properties, including one in Washington, D.C., where he hosts official events. The legality of these moves remains in question.
Trump also made huge profits off of his company's foreign construction projects after he took the White House, including $3 million in the Philippines, $2.3 million in India and $1 million in Turkey.prevnext
Trump has reportedly been losing money steadily since his reality show The Apprentice peaked in popularity and has fallen deeper and deeper into debt. He used his profits from the show to buy golf courses, hotels and other properties which have lost money over the last decade and a half. Ironically, the lack of profitability of these ventures has only reduced Trump's tax bill.
The Times suggests that Trump's presidential campaign was not necessarily intended to be successful in 2015, but was only a publicity stunt to revive his "brand." It certainly accomplished this feat, but it has still not dug him out of debt entirely.
Analysts also note that many of the moves Trump has made to evade debt over the last few years were one-time maneuvers he will not be able to repeat. For example, he took out a $100 million mortgage on the commercial space in Trump Tower back in 2012, which he will not be able to do again. Trump also liquidated hundreds of millions of dollars' worth of stocks and bonds, and he may have as little as $873,000 left.prevnext
Some of the biggest outstanding bills in Trump's name are coming due soon. The $100 million mortgage on Trump Tower is reportedly due in 2022, and there is no sign he will be prepared to pay it. Trump may also owe the IRS over $100 million — a bill that is only being held off by his pending legal battle against the IRS. If the agency moves in to collect, Trump will likely be overdrawn.prevnext
Low-Tax or No-Tax
The Times obtained Trump's tax filings from 18 recent years, and in 11 of those years, Trump paid no taxes whatsoever. In the two most recent years examined — 2016 and 2017 — Trump paid just $750. The methods Trump has used to keep his taxes low are questionable at best, and many have legal consequences he may soon have to face. One method has been to write off expenses that are only tenuously linked to his businesses, such as his personal aircraft, or even his personal residences, which he categorizes as part of his family businesses.prevnext
One point from the report that has gone viral is that Trump wrote off more than $70,000 worth of hair-styling costs during The Apprentice, calling this a necessary business expense for the show. It was deducted from his income taxes, along with nearly $100,000 to hair and makeup artists for his daughter, Ivanka Trump.
His daughter also illustrates another strategy Trump uses to avoid paying income taxes: dubious hiring sprees. Trump reportedly paid enormous "consulting fees" to Ivanka while she was an employee of the Trump Organization, effectively hiding that money from the U.S. government.
Analysts believe this is how Trump manages to project the lifestyle of a billionaire — by displaying the lifestyle of one while funding it all through his ailing businesses. However, those that do have the wealth Trump projects with his lavish lifestyle pay nearly 25 times the amount of federal income taxes that he pays.prevnext
Trump has evaded property taxes with "aggressive" taxes, investigators found, some of which are extremely transparent. The key example is an estate in Westchester County, New York, called Seven Springs, which the Trump Organization claims as an "investment property." Under the tax code, this kind of asset is much different from a personal residence, but there is more than enough evidence that the Trump family uses it as such.
Trump bought the 200-acre property in 1996, and it was reported after that that his sons Eric and Donald Jr. spent summers living there. In 2014, Eric told Forbes: "This is really our compound." The Trump Organization even says that "today, Seven Springs is used as a retreat for the Trump family."
Trump has evaded a total of $2.2 million in property taxes on Seven Springs just since 2014. Ironically, his own tax law passed in 2017 stipulated that individuals can only write off $10,000 in property taxes per year. It is unclear whether Trump has held himself to this rule.prevnext
A major takeaway from Trump's taxes is his furious, ongoing legal battle with the IRS over an audit of his taxes. The Times found that Trump faced larger tax bills than he was used to when The Apprentice first took off, but he recouped these with the "business expenses" and other methods listed above, receiving a $72.9 million tax refund starting in 2010.
Another way Trump claimed this massive refund was by claiming a massive financial loss on his casinos in Atlantic City, and claiming that he made no money from the projects. Trump may have broken federal law here — while he lost money on the casinos, he did receive a 5 percent stake in the new company that formed out of the failure.
The IRS began an audit of Trump's enormous tax return in 2011, and it has still not been resolved. The IRS could soon take Trump to court over this allegedly fraudulent tax return, in which case the full details of the case would become public as a matter of public record. If Trump loses, he would owe the U.S. government over $100 million, accounting for interest on the original amount.prevnext
Comparison to Other Millionaires & Presidents0comments
Trump's debt and financial standing do not match up with the lavish lifestyle he leads, analysts say. Between the years 2000 and 2017, Trump's average federal income tax bill was $1.4 million, while the average American in the top 0.001 percent of earners paid $25 million per year throughout that same time period. Over the course of the last two decades, Trump has reportedly paid about $400 million less in federal income taxes overall than an average taxpayer in that group.
Even other presidents paid exponentially more in taxes than Trump has, though their personal wealth as public servants was likely much lower than Trump's claim to billionaire status. Both former President Barack Obama and George W. Bush paid over $100,000 per year during their presidencies, for example, and often much more. As the Times puts it: Trump "is running a federal government to which he has contributed almost no income tax revenue in many years."prev