It’s true. Donald J. Trump, the actual president, paid $0 in federal income taxes during 10 of the 15 years preceding his 2016 inauguration. If you’re thinking, what about the years he paid that tax? Don’t worry, he paid a measly $750 in income taxes during the year he was inaugurated. If you’re wondering how the hell that’s possible, you’re about to find out.
- Being a really, really bad businessman
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Trump used his bad business ventures to profit more off his good ones. Trump reportedly lost over $315 million on his golf courses alone, over $55 million on his D.C. hotel, and more across the Trump brand. Business losses can count against your taxes, meaning the more losses you have the more tax deductions you receive. Trump used this to his advantage, allowing his unprofitable businesses to serve a purpose: tax avoidance. The New York Times states: “The collapse of major parts of his business in the early 1900s generated huge losses that he used to reduce his taxes for years afterward.” Essentially, Trump would open businesses, receive the licensing income, then allow them to fail in order to write off that income and receive a massive tax deduction.
- Straight up lying to the IRS
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Trump lied on his taxes to receive a massive tax refund. In 2010, Trump received a tax refund of $72.9 million by claiming that his Atlantic City casinos, which he walked away from, were valueless and cited that he earned no money from his investments in it. Specifically, he stated he “determined that his Partnership Interests are worthless” and that he was “hereby abandoning” his stake. Now, this wording is important: Federal law does allow you to claim a total loss on an investment if you receive a total of $0 from it. By saying he “abandoned” the stake in his casinos, he effectively claimed he would receive no future funds from the businesses. This was a blatant lie because, in exchange for new owners continuing to use his name on the properties, he received a 5% stake of the new casino created after he left.
In 2011, the IRS began an audit reviewing the legitimacy of his claim, but it has been ongoing for a decade. For comparison, the IRS notes that a statute of limitations typically limits these audits to three years. Of course, extensions are allowed, but in 2016, most cases were closed in 45 days.
- Making everything a “business venture”
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Trump wrote off nearly everything in his life as a “business venture.” By everything, I really mean private jet purchases, real estate, $70,000 worth of haircuts, etc. By writing these typically personal expenses off as business ones, he qualified for massive tax deductions. For example, his estate in Westchester County allowed him to write off $2.2 million in property taxes since 2014.
So who paid more taxes than Trump in the years he did pay taxes? According to Seth Hanlon, a democratic policy adviser, “a single worker without children who made $18,000 would have paid $760 in federal income tax.” Americans who filed 2018 tax returns paid an average of over $15,000 in federal income taxes, according to Business Insider.
Maybe even worse, it’s not just Trump taking advantage of his lavish lifestyle to avoid taxes. Truly, the political system is rigged to continue giving the rich tax evasion loopholes. In fact, the top 1 percent make up 70 percent of the tax gap, avoiding a quarter of a trillion dollars in taxes every year. So where are your tax dollars going? They’re being put toward what the rich should have been paying for.
As always: stay safe, stay sane, and eat the rich.