If there’s one thing that Donald Trump has been honest about — and really, it might be the only thing — it’s that he does his best to “pay as little tax as possible.” The Republican president has refused to release his tax returns, bucking decades of precedent for both parties. There has been a great deal of speculation about why the man who now runs the White House — and thus the IRS — tells the public his taxes are “none of your business.”
Digging into Trump’s tax secrecy last year, Washington Post reporter Drew Harwell discovered something curious.
The last time information from Donald Trump’s income-tax returns was made public, the bottom line was striking: He had paid the federal government $0 in income taxes.
The disclosure, in a 1981 report by New Jersey gambling regulators, revealed that the wealthy Manhattan investor had for at least two years in the late 1970s taken advantage of a tax-code provision popular with developers that allowed him to report negative income.
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Harwell’s Washington Post colleague, columnist Dana Milbank noted wryly that only 4 years after Republicans nominated Mitt Romney who lamented that 47% of Americans don’t pay income tax, the GOP has nominated a candidate who is a member of that 47%. Referring to Trump as a “welfare king,” Milbank observes that it’s possible that, since the 1970s, Trump basically hasn’t paid taxes,
Several tax experts I spoke with said it’s entirely possible that Trump has continued to report negative income — and therefore not pay taxes — because of loopholes and dubious deductions that benefit powerful real estate interests. They say it’s likely that whatever taxes he does pay would be at a rate lower than the average worker pays.
Trump was definitely not paying taxes in the late 1970s. There’s not really any reason to believe that he would have paid taxes at any time since then if he could avoid it. So, the Republican presidential nominee has probably been using loopholes to dodge taxes for nearly 4 decades. This raises a question:
How Much Of His Taxes Has Donald Trump Avoided Paying Over His Career?
Before the 2016 election, I set out to try to answer this question. Almost immediately, I ran into serious problems with my attempt to quantify Trump’s wealth. It’s pretty easy to find information about the worth of most American billionaires. There’s usually a consensus estimate, with most business publications in the same ballpark, and the billionaire usually agrees publicly with the number. But Trump’s efforts to hide information and sow confusion about his wealth have been very successful over the years.
Trump has said his net worth is over $10 billion. Forbes estimated it to be about $4.5 billion. Bloomberg Billionaires Index put it at about $2.9 billion. A New York Times reporter claimed to have spoken to three people with inside knowledge of Trump’s wealth who said it was under half a billion dollars. Trump sued him for saying it, The Atlantic reports. Why all the smoke and mirrors about his wealth?
The confusion only deepens when you look at his income. Fortune magazine attempted to quantify how much money Trump makes in a year, and ran into the same obstacles one encounters when trying to figure out his wealth. Fortune noted that Trump said his income in 2014 was $362 million. But the magazine points out that that figure was not his income but his revenue, or money inflow before any expenses. After considering different variables, Fortune estimated that Trump’s income was probably about $180 million.
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Fortune concluded that, at that income rate, with a standard tax rate of about 30%, Trump should be paying roughly $50 million a year in taxes. The magazine points out, though, that since Trump is a real estate developer, he can depreciate the cost of his buildings, and report negative revenue. Combining Fortune’s analysis with the Washington Post’s recent report, we can estimate that, Trump could have avoided paying roughly $50 million per year for roughly 38 years. Trump’s systematic secrecy prevents us from knowing how close that assumption is.
If we make that assumption, then, how much has Trump avoided paying? A tax rate of $50 million multiplied by 38 years is $1.9 billion. Over the course of his career Trump has probably avoided paying somewhere in the neighborhood of 2 billion dollars, using loopholes and creative accounting that would be totally unavailable to the average American worker.
That is a lot of money. That kind of money would be a serious boon to the Department of Education‘s effort to build new schools in New York City. That city has sustained Trump’s puffy brand for decades, while he has apparently given it back nothing in return.
The difficulty of quantifying Trump’s wealth and income highlights how bizarrely secretive he is. He wants the world to believe he’s a super-rich successful businessman, but he refuses to prove it. He readily admits that he does everything he can to dodge taxes, but won’t prove that his efforts are all aboveboard. He has pocketed billions of dollars over the decades of his career, but has done everything in his power to pay none of it forward to the nation that he wants to lead. Trump’s modus operandi is raking in the cash for himself, puffing himself up, and throwing up a veil of secrecy for everyone else. What exactly is presidential about that?