Trump's Tax Mess Aside, Can He Pay Off His $1 Billion in Debt? - 2020-10-01
Well, that was certainly one way to knock the devastating New York Times bombshell story of Donald Trump, tax cheat, off front pages and out of television control rooms. Even so, Chris Wallace, the beleaguered debate moderator, did manage to ask Trump whether it was in fact true that he had paid just $750 in federal income taxes for both 2016 and 2017, as the Times reported. Trump's answer, which was most certainly a lie? That he paid "millions of dollars" in federal taxes in those years. (I know it's a lie because (1) Trump is a proven liar, and (2) I have known Susanne Craig, one of the reporters on the Times story, for years and know her to be a meticulous, exacting, and responsible journalist. If she didn't have the goods, the story would not have been printed.) In the ongoing brawl of the evening, Trump also repeated another of his favorite lies: that "soon" enough we'll see his tax returns for ourselves. Yeah, right.
But what of the substance of the Times' reporting? Leaving aside the moral question of whether the president should pay nothing in federal taxes while everyone else pays their fair share, and then lie about that fact on national television, what about the substance of the idea that a sole proprietor—what Trump was as a businessman—who suffers huge losses by running his businesses poorly—which certainly appears to be the case—can use those losses to shelter gains for tax purposes? That is indeed a long-accepted tax principal. Business losses can be carried back to offset profits earned in previous years, generating a tax refund in the process, or they can be used to offset future profits. This is almost certainly what Trump has been doing, my savvy Wall Street sources tell me.
What's clear from both the Times' reporting and other reporting over the years, including some of my own, is that Trump has two pockets of huge losses: one from driving his casinos into bankruptcy during the 1990s, and one from the poor operation of his golf courses (according to the Times, losses at Doral have come out to $162 million, and his three courses in Scotland and Ireland have lost another $64 million) and his few remaining hotels (the Washington Trump International Hotel has lost $55 million, according to the Times). One of his main sources of profit, apparently, has been from his involvement with The Apprentice, which, the Times reported, made him more than $427 million. What would make sense, from a tax perspective, is his using the losses incurred from his casinos, golf courses, and hotels to offset his gains from The Apprentice. Obviously the devil is in the details, but at least in theory this is not crazy.