WASHINGTON – 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 income for 11 of the 18 years examined by The Times – has served to raise doubts about Trump’s self-image as a shrewd and successful businessman.
Since entering the White House, Trump has broken with the tradition established by his predecessors by refusing not only to release his tax returns, but by waging a legal battle to keep them hidden. The Times report suggests why this could have been the case. He reported that many of Trump’s top companies were losing money, even though those losses had helped him cut his federal tax bill to next to nothing.
Eugene Steuerle, a tax expert at the Urban Institute, said he was not surprised that it turned out that Trump had hardly paid federal income tax. Most commercial real estate developers deduct large interest payments on their debts from taxable income, thereby reducing their tax burden. As a rule, they often avoid capital gains taxes by dedicating the profits from the sale of one building to the purchase of another.
“Most tax experts expected that you would find few ways in which President Trump paid taxes,” said Steuerle, who served as a Treasury Department official under President Ronald Reagan.
The Times noted that Alan Garten, an attorney 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 report was based, on which the Times refused to provide in order to protect its sources. The Times said Garten then directly challenged only the amount of taxes Trump paid.
Here are some takeaways from The Times reporting:
Trump only paid $ 750 in taxes in 2016 and 2017
The newspaper said Trump initially paid $ 95 million in taxes during the 18-year study. But he managed to get most of that money back by claiming – and receiving – an incredible federal tax refund of $ 72.9 million. According to the Times, Trump also pocketed $ 21.2 million in state and local refunds, which are typically based on federal deposits.
Trump’s disproportionate reimbursement has been the subject of an audit of his long-standing finances by the Internal Revenue Service. The audit was widely known. Trump claimed that was the very reason he couldn’t release his statements. But the Times report is the first to identify the problem that was primarily in dispute.
As a result of the refund, Trump paid an average of $ 1.4 million in federal taxes from 2000 to 2017, the Times reported. In contrast, the average US taxpayer in the top 0.001% of earners paid about $ 25 million per year during the same period.
Trump funded extravagant lifestyle with the use of business expenses
From his home, his plane – and $ 70,000 in hairdressing on his TV show “The Apprentice” – Trump has capitalized on the costs incurred by 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 also classified them as business expenses. Since companies can write off business expenses as deductions, all of these expenses helped reduce Trump’s tax debt.
Many of his best-known companies are losers
The president has often cited his remote hotels, golf courses and resorts as proof of his success as a developer and businessman. Yet these properties have drained money.
The Times reported that Trump has claimed $ 315 million in losses since 2000 at his golf courses, including the Trump National Doral near Miami, which Trump has described as a crown jewel of his business empire. Likewise, his Trump International Hotel in Washington lost $ 55 million, the Times reported.
Foreign visitors helped support Trump properties
Since Trump started his presidential run, lobbyists, foreign governments and politicians have spent large sums of money on his properties, a spending spree that has raised questions about its merits and legality.
The Times report illustrates just how bad those expenses have been: since 2015, its Mar-a-Lago resort in Florida has received an additional $ 5 million a year thanks to an increase in membership. The Billy Graham Evangelistic Association spent at least $ 397,602 in 2017 at the Trump Hotel in Washington. The 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 pressures as debts mature
Trump seems sure to face great financial pressure from the huge pile of debt he has absorbed. The Times said the president appears to be responsible for $ 421 million in loans, most of which will mature within four years. On top of that, a $ 100 million mortgage on Trump Tower in New York will mature in 2022.