Man, I have been going about this tax thing all wrong.
Reading the extensive, compelling and revelatory coverage of President Trump’s tax returns in the New York Times last weekend, I realized that I’ve been a real Pollyanna about paying the taxes I owe and trying to stay out of trouble with the IRS.
Turns out one of Trump’s key strategies is to always be in trouble with the IRS. He’s dragged out a potentially devastating audit for a decade, and as long as it’s pending, he’s not on the hook for a substantial and possibly ruinous repayment. I don’t think the IRS would give most of us 10 minutes to settle a dispute over a refund. We don’t owe enough money to make trouble.
Trump’s tax bill was reported as $750 the year he ran for president, and $750 his first year in office. One imagines the president looking under White House couch cushions for enough loose change to keep the feds at bay. For 10 of the previous 15 years, his tax bill was zero. He paid more taxes overseas, in places where has wrangled business deals.
The New York Times’ coverage laid bare a lot of Trump’s business and tax machinations that, while not necessarily illegal, belie the image he has projected for decades: that of an enormously successful business titan.
Much of the outrage has been about how little he paid in taxes. For me (longtime business reporter and editor), the fascination is how much his business ventures lost.
Trump is all about losing money. Lots of money. Being a world-class loser (one of his favorite slurs) has sustained him like a billionaire superstar instead of the pauper he may well be. Losing is how Trump stays afloat, plunging into one huge, speculative, doomed deal after another. But The Stable Genius has racked up failure after grandiose failure despite his snake oil salesmanship.
How does he do it? When you start with some money (his father’s, inherited and according to some accounts finagled away from the rest of the family), and can convince others to lend you even more money, you can afford to lose a lot. You just have to be really brazen about it. Trump has relentlessly failed his way to the top. There’s probably a business adage in there somewhere.
As the New York Times story put it, he “racks up extensive losses that he aggressively employs to evade taxes.” Trump writes off everything, large and small. He supports his extravagant lifestyle by claiming most business expenses as deductible.
“And he has previously bragged that his ability to get by without paying taxes ‘makes me smart,’ as he said in 2016,” the Times story notes. “But the returns, by his own account, undercut his claims of financial acumen, showing that he is simply pouring more money into many businesses than he is taking out.”
It’s a perversely appealing strategy, but I just don’t see how that would work for me. As I sometimes lamely joke to friends, the Methow Valley News is not a nonprofit — at least, not on purpose.
Trump once was quoted as saying something to effect that if you owe a bank $1 million, you’re in trouble — but if you a bank $1 billion, they’re in trouble. Especially if the debtor is The Donald himself, who notoriously stiffs pretty much everyone he owes money. He owes so much to lenders ($421 million, by the Times account) that his hollow empire could crumple like a wet paper cup if they press him for repayment. The massive indebtedness, and likely obeisance, to those lenders has led some people to speculate whether the people Trump owes money to are really running the country.
On a smaller scale, there’s the $70,000 a year deduction for hair styling while he starred in “The Apprentice.” That’s not going to work for me either. I can’t remember the last time I saw $70,000 in a year, and my hair has retreated so dramatically that even Trump’s hair sculptor could not whip it into something frothy.
Trump mostly sails along on bluster and bluff. I’m not sure whether that says more about Trump or our tax code, which the president has made work to his advantage — even as he demonstrates a spectacular lack of business acumen.
“Ultimately, Mr. Trump has been more successful playing a business mogul than being one in real life,” the Times concludes.” That being the case, you have to give Trump credit for fully exploiting the role of a lifetime while casting us minor characters as suckers.