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Trump Taxes

‘Fake news’ is a claim US President Donald Trump has used time and time again.  He uses the term to cast doubt upon legitimate news he claims are responsible for misrepresenting him.  The New York Times has collated decades worth of tax information on Trump.  They claim “chronic losses and years of avoidance”.  This is a significant claim, especially in the run up to the US Presidency Elections in November.  Crucially, if Mr Trump loses to the Democrat Joe Biden in November, he would no longer receive Presidency immunity in this case.

Mr Trump unsurprisingly claims the report is ‘fake news’.  Here we look at some of the background to the claims and the allegations aimed at Trump.

What is the background to all of this?

For years the Democrats have targeted Mr Trump for not making his Tax Returns public, as other American Presidents have.  His predecessors Barack Obama and George W Bush paid $100,000 each year in federal income tax, often more than this.

The issue is currently under appeal in the lower courts.  Mr Trump’s lawyers continue to argue he should receive total immunity whilst he is in the US Office.  They go to state Congress has no appropriate claim to obtain a copy of the records.

The US Supreme Court have however ruled that Mr Trump’s financial details could in fact be examined by the prosecution in New York.

Mr Trump strongly suggests the tax investigation into his affairs is a ‘witch hunt’.  Of significance is the other investigation he is currently under.  The Internal Revenue Service (IRS) are in dispute with Mr Trump over a $72.9 million tax refund he received.  The New York Times claim Mr Trump could be made to pay over $100 million in taxes if the ruling goes against him.

What are the New York Times Claiming?

  • The NYT are using the examples of Obama and Bush and the federal income tax they regularly paid each year.  As alluded to above, they both paid over $100,000 each year in federal income tax.
  • It is alleged Mr Trump only paid $750 in federal income tax in the year he ran for the presidency (2016), and also his first year as President (2017).
  • Mr Trump has not paid these taxes in 11 of the 18 years of tax records the NYC have obtained.  Between the years 2000-2015 he paid $0 in tax in ten of these fifteen years.
  • The NYC claim Mr Trump is liable for hundreds of millions of US Dollars in loans.  They claim he owes $300 million of loans which need to be repaid by 2024.
  • Mr Trump has declared tax deduction on significant expenses.  One example is $70,000 spent on hair styling for TV interviews.
  • His daughter, Ivanka Trump, has reduced the family’s tax liability by charging large consulting fees.
  • Mr Trump has reduced his taxes by claiming losses on many of his businesses.
  • He paid $95 million in taxes over 18 years following his successful TV programme, ‘The Apprentice’.  He later received a large federal tax refund to the value of $72.9 million.  This refund remains under scrutiny.

Is it Illegal what Donald Trump has done?

The NYT claim large scale avoidance.  It is reported many Americans will use loopholes or technicalities to pay less tax.  Whilst it is certainly controversial, especially in these challenging times, it is not considered illegal.

What does this mean for Donald Trump?

This isn’t ideal timing in the run-up to the Presidency Election on the 3rd November.  He will most likely face many questions on these allegations in the run-up.  Mr Trump will be challenged on the topic in all the presidential debates.  No doubt, it will be used as ammunition against him to score polling points.

The allegations are serious and will no doubt harm his campaign to some extent.  He is being accused of avoidance, as the country is dealing with the financial implications of the coronavirus pandemic.  The Democrats also continue to criticise Mr Trump for the way he has handled the coronavirus crisis.

The Trump Organisation denies the New York Time’s allegations.  Mr Trump has on previous occasions labelled himself as ‘smart’, claiming so little tax.  Rightly or wrongly, several Republicans have backed Mr Trump on that.

Mr Trump is used to controversy and allegations being thrown at him.  He won the 2016 Presidency Election on the back of allegations of sexual misconduct.  This isn’t the first controversy and likely won’t be the last to be aimed at Donald Trump.

 

Nigel Carr
Nigel Carr
Nigel is a freelance financial writer and Author at Kinsella Tax. A business graduate he writes on financial matters as well as music for a number of high quality websites.
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