I have written two posts arguing that the prospective and actual release of former President Trump’s tax returns by House Democrats, who had obtained them by subpoena, was an abuse of power with no legitimate legislative purpose. It seemed pretty clearly to be a purely politically-motivated act. Based on the early reporting, it’s not obvious to me what the political purpose was, either.
NYT (“Trump Paid $1.1 Million in Taxes During Presidency, but $0 in 2020, Report Shows“):
In his first three years as president, Donald J. Trump paid $1.1 million in federal income taxes before paying no tax as his income dwindled and losses once again mounted in 2020, according to tax data released Tuesday by a House committee.
The data, which includes details of Mr. Trump’s federal tax returns from 2015 through his full term in the White House, shows that he began his presidency suffering the sort of large business losses that had defined much of his career and paid almost nothing in income tax. But his fortunes changed in 2018, as he reported $24.3 million in adjusted gross income and paid nearly $1 million in federal tax.
Mr. Trump’s tax returns show that he was in the black the following year as well, reporting $4.4 million in income and paying $133,445 in tax. But in 2020, as the country staggered under the coronavirus pandemic, his finances reversed course: Mr. Trump reported a loss of $4.8 million and zero income tax.
[…]
His reports to the I.R.S. portrayed a businessman who took in hundreds of millions of dollars a year, yet racked up chronic losses that he aggressively employed to avoid paying taxes. But while the personal income tax data analyzed by The Times ran only through his first year in the White House, 2017, the information released Tuesday encompasses his entire presidency.
As previously reported by The Times, Mr. Trump paid just $750 in federal income tax and reported $12.9 million in losses in his first year as president, in keeping with a long pattern of reporting losses and paying little or no taxes. The newly released data shows that in 2018, his sudden burst of income occurred largely because he had sold properties or investments at a gain of $22 million. He also appears to have exhausted business losses he had been rolling over year after year to reduce his taxable income. The precise source of the income gain is not clear from the reports.
By 2020, however, Mr. Trump had returned to reporting losses. In fact, despite the capital gains that boosted his bottom line in 2018, the entirety of his core businesses — mostly real estate, golf courses and hotels — continued to report losses every year, totaling $60 million during his presidency. He was able to recoup $5.47 million because he had made millions of dollars in estimated tax payments that he ended up not owing.
Presumably, this reinforces the idea that Trump is actually a pretty lousy businessman. But it looks to be more of what we already understood: the profits from parts of Trump’s business empire are, in most years, offset by losses in other parts.
Now, maybe there’s something here:
Tuesday’s report also raises questions about some of Mr. Trump’s business practices, and the committee has requested that the I.R.S. investigate some of them further. Among them are his charitable contributions.
The tax records previously obtained by The Times show that Mr. Trump made significant charitable donations over the years, but that the vast majority of them came in the form of land donations, often after he had exhausted efforts to develop it.
The new tax data showed that while in the White House, Mr. Trump made charitable contributions in cash, something the House committee said warrants further investigation.
“We would have inquired as to whether the large cash contributions were supported by required substantiation,” the report said.
Given that the IRS is supposed to automatically audit the President’s tax returns and didn’t do so, it’s very much a red flag. But the Ways and Means Committee presumably has access to top-notch accountants and tax attorneys and didn’t actually find any wrong doing—just something they think warrants further investigation.
This is more interesting:
The Times’s findings were cited several times in the report, and helped shape the direction of the committee’s investigation.
For instance, Mr. Trump owns an estate in Westchester County, N.Y., called Seven Springs. For years it was classified as a personal residence. The tax records obtained in 2020 by The Times showed that in 2014, Mr. Trump reclassified the estate as an investment property.
Since then, he has written off $2.2 million in property taxes as a business expense — even as the law allows individuals to write off only $10,000 in property taxes a year.
On Tuesday, the committee revealed that the I.R.S. was looking at this tax maneuver.
But here’s the thing: the reclassification happened in 2014—three years before Trump became President. Presumably, his accountants believed this maneuver was one they could get away with and, indeed, they did.
Do I think Trump and his accountants constantly push the envelope to diminish his tax liabilities? Of course. Hell, he bragged about that during nationally televised Presidential debates. But our tax code practically invites creative accounting, particularly for large business networks.
Beyond that, this strikes me as a weird fishing expedition. The Committee subpoenaed the returns for the perfectly legitimate legislative purpose of investigating strongly suspected malfeasance while Trump was in office. Now they’re trying to get the IRS to audit his business practices from years before.
Again, maybe that should be the norm. Those who hold offices of high public trust should be held to very high standards of personal ethics, especially in terms of doing their civic duty and paying taxes. But, if we’re going to do that with Trump, we should do that with all high officials, certainly to include Members of Congress.
The reports also showed that Mr. Trump continued to collect large sums of interest income, a total of $38.1 million during his presidency. They do not disclose the source of that income, but the tax returns previously obtained by The Times showed that through 2017 nearly all of his interest income came from his share of profits earned by a partnership that is controlled by Vornado Realty Trust.
The partnership owns two valuable office towers: 1290 Sixth Avenue in Manhattan; and 555 California Street in San Francisco. Mr. Trump, who has a 30 percent share in the partnership, has no authority over its management, and it has consistently been his strongest-performing asset.
And?
To be clear, the early reporting is based on the Committee’s summaries of their findings. Maybe there’s more to be found when the redacted documents themselves are released. One presumes that the press corps will pore over them for weeks and months.
It seems that, if Congress is going to take the unprecedented step of releasing a former President’s tax records, doing so should add major information to the public debate. Thus far, it’s not at all obvious what that might be.
