This past week, The New York Times reported President Donald Trump paid merely $750 in federal income taxes in the years of 2016 and 2017, the years he was elected and inaugurated president, respectively. Since then, the pitiful number has circulated widely across media outlets, with mixed reactions from the general public.
While true, some important details exist beyond the headline’s reach, particularly if you read the main article in its 10,573-word entirety.
In said years, Trump actually paid the IRS $1 million and $4.2 million, respectively, “for income taxes he might owe.” Due to business losses, however, everything but the negligible $1,500 amount was deducted, and “most of the payments were rolled forward to cover potential taxes in future years,” as sated in the NYT article. If in future years he seems to get off easy, now you’ll know why.
Trump has paid “tens of millions of dollars” over the years in other forms of federal taxes, such as “Social Security, Medicare and taxes for his household employees.” This is to be expected of course, but importantly highlights that Uncle Sam, a hungry man indeed, has helped himself beyond a simple $1,500 from the president. Further, he still is bound by state and local tax laws, a burden that likely dropped significantly since he switched his residency from New York to Florida last October.
NYT further notes Trump paid goose-egg federal income tax in ten of the fifteen years prior to 2016, again due to business losses, but coughed up “a total of $70.1 million” between 2005-07 from “The Apprentice” profits, as well as $641,931 in 2015. Between 2000 and 2017, he paid alternative minimum tax in seven different years, totaling $24.3 million.
Interestingly, our president even paid $15,598 in taxes in Panama; $145,600 in India and $156,824 in the Philippines, on profits from foreign-based Trump Organization enterprises. So much for “America First!”
But in the past two decades “Trump has paid about $400 million less in combined federal income taxes” than others of comparable net worths. Even if he’d paid only the average effective income tax rate for the top .001% of earners in 2017, 24.7%, that would still have totaled over $100 million.
Someone of Trump’s wealth can easily hire the most skilled accountants and tax attorneys available, to capitalize on any deductions and loopholes the law may offer. Do you knowingly send the IRS a red cent more than you absolutely must, with an ear-to-ear smile on your face? No, because such people don’t exist. It certainly doesn’t help that different types of income, such as capital gains, are bound by different laws that are often exploited so as to become remarkably lenient.
There is currently an albatross around Trump’s neck, however. In 2010, he was granted a $72.9 million refund, over his casinos’ losses. The IRS is now auditing the refund over Trump’s assertion he entirely divested from the company, hoping to win more relief. Despite this, he had claimed stocks in a new company formed shortly thereafter, thus putting the truth of his statement in jeopardy. If the refund is nullified, Trump could be ordered to pay over $100 million to the IRS.
In many years, Trump’s losses outweighed his gains, sometimes drastically, empowering him to win such abundant tax relief over such a lengthy time period. For instance, “the nearly $1 billion in losses” he incurred from real estate due to the 1990-91 economic recession “generated a tax deduction [that remained valid] for up to 18 years.”
Perhaps it isn’t terribly outrageous to grant relief to someone so deeply in the red. But Trump has also deducted superfluous personal expenses from his taxes, such as almost $100,000 on hairdressing and makeup for “The Apprentice.” Or $2.2 million on business property taxes from the last seven years. Or $26 million on unexplained “consulting fees.”
Or an unspecified amount on personal aircraft and fuel, for personal travel between his numerous properties. Or, most outrageously, $119.3 million on his Seven Springs property, a family retreat mansion in New York. Needless to say, there is no reason any of these should be allowed as deductions. The list goes on, and you should read it for yourself if you’re so inclined.
On several occasions, the president has stated he would release his tax returns. Every president since Jimmy Carter has released several years of full returns and divested from all business stakes before taking office, to avoid potential conflicts of interest. Although neither are required, per se, the fact that Trump refuses to do either has led many to suspect he has something to hide.
From what we currently know, Trump has not run afoul of the tax laws, at least not clearly. But here’s a not-so-big secret: The tax code is written by the rich and powerful, for the rich and powerful. Both parties have ensured for decades that it stays this way.
Every Democratic presidential contender supported hiking tax rates on wealthy individuals and corporations. However, if you do not propose limiting deductions and closing loopholes in tandem, it will never matter what the supposed rate is. The targeted groups then, could continue to circumvent their way around the tax laws, becoming increasingly richer as too many working Americans struggle to stay afloat, particularly during this pandemic. As a result, economic inequality has become a front-and-center issue of this election.
With this being said, the most powerful way to change the system is to participate in your democracy. If you're as outraged at Trump's "cheating of the system" as countless Americans are, there remains one question: Are you registered to vote?