In 2018, I called for the IRS to open a criminal investigation into President Donald Trump based on his glaring misuse of the Trump Foundation. In 2019, after a New York state judge forced Trump to pay $2 million in restitution for misuse of the Trump Foundation, I again called for the IRS to investigate Trump's improper use of a charity.
The New York Times just obtained over 20 years of tax return data for Trump's personal and business federal returns. The returns show that he paid no taxes in 10 of the 15 most recent years and exactly $750 in each of 2016 and 2017. So am I able to call with the same clarity for an IRS investigation of his personal returns now based on the new information? No. Nothing reported in The Times is, at least on its face, obviously illegal.
But much of the new information doesn't put to rest my original concerns that Trump exhibits a callous disregard for our tax laws. If anything, it highlights a series of positions that should raise red flags for any good auditor.
Many have noted the massive national security risk that his debt presents to us as a country. But his willingness to flout the tax laws, as exhibited by his misuse of the Trump Foundation and the portrait of aggressive tax positions carefully painted by The Times, also presents a real civic risk.
Taxes pay for all that we do together. We need them. They matter. When our president pays little to nothing toward that collective effort and acts in ways that call into question the very nature of our collective civic duty, a failure to have a real accounting could erode our common sense of duty.
A couple of major caveats: I haven't seen the returns, and tax returns are only biased snapshots of someone's financial health. The returns can't tell us absolute facts about the president's financial situation; neither can they tell us much about his intent, which would be needed to make any kind of claim of tax fraud.
Even so, as a former attorney with the IRS and now a tax law professor, I am not surprised, but I am troubled by the picture that is emerging. At the very least, it tells us something about the president's poor business acumen and his aggressive behavior toward taxes.
So what stands out? Let's start with the petty. Tax law 101 generally prohibits you from deducting your haircuts, because they are inherently personal. Trump apparently deducted $70,000 for haircuts in one year. Getting your hair done solely for a TV appearance would likely be deductible. But if the cost is mostly associated with daily grooming, then the deduction would be improper.
The deduction of the attorneys' fees as described also calls out for scrutiny. Were those fees paid for legitimate business purposes, or was the payment more personal in nature?
The large consulting fees from international business deals call for scrutiny, too. The Times reports that about $750,000 in such fees were paid to daughter Ivanka Trump. It's strange that you would pay an officer of a company a consulting fee at all, when the duties being compensated presumably include working on behalf of the company. This could be an effort to avoid the gift and estate tax, much like Trump's father, Fred Trump, is reported to have done.
Trump also took a charitable contribution deduction of $21.1 million for what is known as a conservation easement. This means he pledges to restrict the use of a piece of property in some way that is environmentally beneficial. Both Congress and the IRS have found these transactions to be ones that taxpayers regularly abuse. Given Trump's well-established abuse of charity, this one screams for an auditor's review.
While we don't know enough to make any firm conclusions about The Times' discussion of the $72.9 million refund Trump claimed starting in 2010, the IRS is apparently auditing that return. The basics of that one are pretty simple. The Times suggests that he claims a total loss on an investment in casinos in Atlantic City, New Jersey. But it appears he still holds an interest in that very same investment. Though there are deep complexities to the tax issue involved, you don't need me to process the conflict inherent in that claim.
On the loss front, the picture that emerges is of a man who is the great American rags-to-riches story, just in reverse.
We already knew from previous Times reporting that Trump reported a loss of almost $1 billion in 1995. Those losses appear related to his investments in casinos. The losses exhibited in the most recent data are connected to more casinos and now to golf courses and his hotels. It's hard to calculate the additional losses based on the article, but according to The Times, the president lost another $1.4 billion just in 2008 and 2009.
The Times suggests that the president holds over $471 million in debt coming due in four years. All the while, he continues to mortgage Trump Tower and sell off assets. All of this is the behavior of someone losing money and assets quickly.
When you own a business, the measure of income is more complex than for an employee, and the tax law can be quite friendly. The most fundamental part of owning a business, though, is that you are allowed to deduct all of your business expenses. If you lose a lot, you get big deductions. But that doesn't mean you are succeeding, and all of those losses can catch up to you.
The obvious disconnect seems to be between Trump's lifestyle and his finances. How could Trump maintain such a lavish lifestyle, with his so-called Winter White House in Mar-a-Lago and a palatial residence in Trump Tower, and yet pay such a minuscule amount of taxes? It must be understandably galling to Americans who pay more monthly rent than this man paid in income taxes during his first year as president.
The reporting points to two answers: Trump lost a lot of money in numerous big and bad business deals, and Trump engaged in aggressive tax positions that very well might have been improper or fraudulent — we just don't have enough information yet.
When we look at Trump, we know he enjoys an exceptional lifestyle. The reported tax returns reflecting almost constant significant losses conflict with that life. Few of us pay as little as him in taxes.
Resolving one man's tax situation wouldn't typically seem worth America's time, but in this case, it's a matter of national importance. Though there is no way any IRS audit of Trump could conclude before the next election, it's critical that our system work to hold him to account for his actions.