Trump's taxes: what we know so far

We are beginning to have at least a partial picture of what Donald Trump has been trying to hide since his tax returns were concealed in the 2016 campaign, and then to avoid the Democrats' demands to consult them.

The New York Times has published two major investigations: the discovery of tax documents filed by Trump's father and documents produced by Trump himself, mainly in the 1980s, which explain how Trump became rich initially by paying remarkably little Treasury taxes. Department.

All the Times has found so far is far too old to be used as a basis for current criminal charges or even charges. provide a real insight into the current state of Trump's business. The documents indicate, however, that Trump has lied to the public on a number of important issues, including the extent to which his wealth is simply inherited rather than the result of commercial prowess.

They also indicate a potentially illegal activity while Fred Trump was seeking to transfer tax-free wealth to Donald and his siblings. The limitation period has passed, however, and Trump's sister, a federal judge, retired abruptly in February, ensuring that there would also be no judicial inquiry into judicial ethics.

Trump's returns also show how the current political paradigm in the United States allows the rich and powerful to steal money from the Treasury, with probabilities of detection or limited consequences.

In other words, all this is very important and interesting, and it should not be neglected in the daily comings and goings of politics. But it is equally important to understand what these scoops do not tell us, but to comply with the demands of Congress: who is Trump currently paying, and what do they receive, if any, in return?

Trump claimed $ 1 billion in tax losses

On Tuesday night, the Times released a blockbuster report by Ross Buettner and Susanne Craig based on statements that Trump had produced from 1985 to 1994. The IRS had released anonymous statements of America's highest income during this period , and the Times The reporters spoke to an anonymous source who had legal access to Trump's statements. The source told The Times some key facts about the statements, which allowed the reporters to determine which anonymous and publicly available statements were those of Trump, which allowed them to be analyzed.

This is a somewhat controversial reporting technique because the anonymous data from the IRS is a very useful tool for academic research, as the agency tends to be fairly stingy for confidentiality reasons. The fact that the Times has shown a viable journalistic path for de-anonymizing data makes it likely that the IRS will be even more reluctant to publish such information in the future.

The big conclusion from the analysis of returns, however, is that over this 10-year period, Trump has recorded business revenue losses of more than $ 1 billion, which allowed it to not pay no federal income tax for eight of the ten years, despite its obviously high level. standard of living.

It should be noted that despite his bragging spirit, Trump was not a successful business executive early in his career. While his father made a lot of money in the unglamorous construction and operation of apartment buildings in Brooklyn and Queens, Trump took a close interest in the Atlantic City casino. This has resulted in multiple bankruptcies. Trump only recovered from the first investor scam in the 1990s and then reinvented as a reality TV star.

However, as Josh Barro writes in New York magazine, it seems inconceivable that Trump himself lost a billion dollars, simply because (as we'll see later), he did not never had a billion to lose.

"The main lesson learned from the massive losses reported by Trump between 1985 and 1994 is not that he was a bad businessman," Barro writes, "but that he was humbly under-taxed."

Trump himself would have you believe that it was only a standard tax shelter for the rich, and that it was said on Twitter Wednesday morning.

A problem with this, however, is that Trump was clearly an outlier.

Trump has recorded greater losses than any other person in the United States for several years in question. And in 1990 and 1991, the losses reported by Trump were double those reported by anyone at the IRS. It is certainly possible that Trump and his team of lawyers and accountants are simply smarter than anyone in the field of taxation. But it is also possible that no one else claims losses of this magnitude because there was no legal way to do so, and Trump simply escaped.

At a minimum, based on a separate Times scoop, we have pretty good evidence that Trump escaped bypassing the rules on donations and inheritance taxes.

The All County Building Supply & Maintenance scam

The previous scoop, also published by The Times, focused on tax returns filed by Donald Trump's father, Fred.

The main conclusion of this presentation was that Trump had been lying for years about the extent of financial assistance that he had received from his father. Trump is still portrayed as an autonomous man, helped by a "small" million dollar loan from his father. The Times revealed that he had in fact benefited from more than $ 200 million (more than $ 400 million in inflation-adjusted dollars) from his father's wealth transfers, some of which in part. inheritance, partly from donations and partly, which was crucial. a terribly illegal system.

Fred Trump created his children in 1992 as the owners of a company called All County Building Supply & Maintenance, which sold boilers, refrigerators, cleaning products and other equipment at unusually high prices to Fred Trump's buildings. At first glance, this sounds very much like an illegal attempt to evade tax on inheritance and inheritance taxes by masking the transfer of wealth as a business transaction. In addition, Fred Trump further aggravated the offense as the properties in question were subject to rent regulation and he cited the high prices paid to justify the increase in rent.

If this loophole is legal, it's hard to understand why anyone should ever pay death duties. Rather than leaving $ 1 billion to your heir, you can buy a pair of socks for your heir for $ 1 billion and call it a commercial transaction.

Fred's got out at the time, though, and by the time the Times published the information, the statute of limitations had expired.

Some insightful individuals, however, noted that there was no statute of limitations for judicial ethics investigations and filed a complaint against Trump's sister, Maryanne, who had previously been a federal court of appeal judge. . This would have opened an investigation into her that could, if found guilty of wrongdoing, also involve the president. But she ended the investigation by retiring as soon as the court officials announced that they were going to review the complaint.

The Trump family has apparently avoided legal liability for this scam simply because it happened almost 30 years ago. But it is possible that Trump is trying to hide his most recent statements for the rather mundane reason that he escaped by misleading his taxes and that he does not think his statements can withstand public scrutiny.

We learned some other embarrassing things

The Times found in the 1980s tax returns that it had nothing to do with what it had used to turn its celebrity status into a kind of scam.

He would secretly buy shares of a company, would publicly suggest that he was considering buying out the entire company, watch the stock price rise in response to Trump's takeover rumors, and then sell his shares at a profit without to really do anything.

He managed that with United Airlines in 1987, which led him to try again with the Hilton, Gillette and Federated department stores in 1988. It was apparently a situation like "I'm fooled five" time, shame on you "; Investors understood that Trump was engaged in a scam and that it was no longer working. At about the same time, the Securities and Exchange Commission fined Trump $ 750,000 for a different stock transaction – one of the many cases in which Trump was caught breaking the rules was allowed to settle the charges. with a fine without any admission of guilt.

As president, Trump throws global financial markets from time to time into a dead end with unexpected tweets that threaten tariffs and trade wars. It would be interesting to know how these market convulsions affect Trump's finances, but we obviously can not say because he keeps his statements secret.

In addition, the Times report on Trump's taxes highlights a seemingly illegal aspect of Trump's casino activities. In 1990, Fred sent a man named Howard Snyder to Donald Trump's casino in Atlantic City with a $ 3.35 million check, which Snyder was in the habit of buying for casino chips. He left the casino without even hitting the craps table. This money was actually an untaxed gift from father to son. At the time, this resulted in a $ 30,000 fine, the transaction violating the New Jersey casino law, but the Times reports revealed an additional angle of tax evasion.

All this information, however, is at least 25 years old. The Congress is seeking more up-to-date information that could shed light on other issues.

Congress wants Trump's statements

Article 6103 of the Internal Revenue Code was written in 1924. Clearly, the wording of the law confers on the chairman of the House of Commons Committee (and the chairman of the counterpart committee of the Senate) the ability to obtain tax returns from any person. for some reason.

The specific statutory wording does not limit this power in any way, nor does it leave the Secretary of the Treasury with a discretionary power over compliance with the request.

Upon the written request of the Chair of the House of Representatives Committee on Ways and Means, the Chair of the Senate Finance Committee or the Chair of the Joint Committee on Taxation, the Secretary shall provide such committee with any report or return information specified in this request, with the exception of any return information that may be associated with a particular taxpayer, or otherwise identify, directly or indirectly, a particular taxpayer must be provided to that committee only if it is in camera unless the taxpayer does not otherwise agree to such disclosure.

As George Yin, former chief of staff of the Joint Committee on Taxation and professor at the University of Virginia, said in a February Congressional testimony, the historical context is that in the 1920s, the president "had unconditional access to tax returns" and therefore, "Congress wanted to give the same rights to its commissions".

The White House and the Treasury Department, however, refuse to comply with the law.

This will end up in the courts and Trump will probably lose at some point. But if the Democrats are able to get the president's tax returns, the question of whether they can be made public is discussed.

Even though the Ways and Means Committee obtains Trump's tax returns easily, it could then vote for some or all of these to be passed on to the rest of the House of Representatives, so that all members have access. But we do not know if it is legal to make this information public. They would have to go through a long legal battle even before reaching this stage.

Ken Kies, chief executive of the lobbyist federal lobby group, told Congress in February that it would be a crime for a congressman or his staff to publicly disclose their tax returns, punishable by a term of imprisonment. up to five years in prison. Others, however, were not in agreement. Yin argued that if the committee voted for their disclosure to the entire House, the tax returns would be made public.

In other words, the drama can continue for a while. Only Trump knows what the real issues are, but it's possible to know what key issues can be based on what we know.

The known unknowns of Trump's finances

Given that Trump is currently president of the United States, the most obvious thing his tax returns would tell us is who pays him money.

Recently, for example, the mayor of Baltimore resigned after discovering that she was selling loose copies of her book.Healthy holly, to entities that have contracts with the city of Baltimore. The sprawling, opaque empire of Trump's businesses creates many opportunities for wealthy individuals, corporations and foreign governments with an interest in US public policy to hand over money to the US President. In general, we know that many of these companies and governments have booked events at the Trump Hotel in Washington, DC, in order to gain favor with him.

But we have no real idea of ​​the breadth of Trump's trade relations or his interlocutors. Tax returns would not fully or satisfactorily answer these questions, but they would be very enlightening.

In addition, in the tax returns we have seen, there are several examples of illegal tax evasion – tax evasion that will not be fully investigated because the statute of limitations has expired. It is certainly possible that over the past 25 years, Trump has been orderly in his affairs. The reality, however, is that the IRS's enforcement of tax evasion by the rich has become much more lax in recent years, thanks to Republican budget cuts. In other words, rational tax evasion would be more aggressive in recent years than in the 1980s and early 1990s, and we know that Trump was very aggressive at the time.

But beyond these two great unknowns of tax evasion and corruption, there are many unknown unknowns. The United Airlines pumping and unloading program is not necessarily something anyone would want to examine, it is apparent from the review of his return. It is clear that Trump did not manage the casinos well, but throughout his career he has also been extremely flexible, capable and opportunistic in proposing money management systems.

But despite all of its celebrity over the years, we just do not know what these schemes – or who the victims are – are and how tax returns are one of the best ways to find out.