Trump tax returns undermine his image as a successful entrepreneur
By Jim Tankersley, Susanne Craig and Russ Buettner
House Democrats released six years of former President Donald Trump’s tax records late last week, offering new insight into his business dealings that further undermined his long-cultivated image as a wildly successful businessman.
The release Friday morning contained thousands of pages of tax documents, including individual returns for Trump and his wife, Melania, as well as business returns for several of the hundreds of companies that make up his sprawling business organization. It followed the release of reports from Democrats on the Ways and Means Committee that showed Trump had paid a total of $1.1 million in federal income taxes in the first three years of his presidency, but paid no tax in 2020 as his income dwindled and losses mounted.
The document disclosure drew rebukes and threats of retaliation from Trump and his Republican allies in Congress, who suggested that once their party takes over the House on Jan. 3, they may seek to disclose tax returns filed by Democratic politicians, Supreme Court justices and members of President Joe Biden’s family, such as his son Hunter.
The documents appeared to show that Trump violated his campaign promise to donate his salary as president, at least in 2020, when he reported no charitable giving of any kind. They also suggested Trump’s tax bill may have gone up because of a change in his signature 2017 tax overhaul: a limitation on the deduction of state and local taxes paid.
In a statement Friday, Trump denounced Democrats and said the decision to release the returns had been “weaponized.”
“The ‘Trump’ tax returns once again show how proudly successful I have been and how I have been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs and magnificent structures and enterprises,” he wrote.
But the returns, which cover the tax years 2015 through 2020, do not show much success for Trump in his recent business dealings. They show Trump often reported heavy losses from his own ventures, even as he continued to cash in on assets he inherited.
Trump’s history of inheriting wealth and then losing it was chronicled by The New York Times in 2020, when it obtained decades of Trump’s tax information, including much of what was disclosed Friday.
In 2018, after a decade in which the former president declared no taxable income according to tax returns reviewed by the Times, Trump reported taxable income of more than $24 million. He paid almost $1 million in federal taxes, nearly the entire total he paid as president.
That income appeared to be the result of more than $14 million in gains from the sale of an investment his father had made in the 1970s, a Brooklyn housing complex named Starrett City, which became part of Trump’s inheritance.
Much of what the committee made public Friday had also been revealed in a report with top line numbers that the committee released last week. But the thousands of pages of tax documents offered new insights into the president’s income and spending.
The documents show, for example, that the effect of his inheritance in 2018 was greater than what the Times previously reported: Trump recorded $25.7 million in gains from the sale of business properties that he and his siblings had inherited or taken through trusts, including the sale of Starrett City.
The sales of business properties Trump created himself came at a loss, however, dragging down his net proceeds and somewhat reducing his tax liability, the tax itemization shows. They included a total of $1 million in assets or equipment sold at a loss by two of his business entities, and another $1 million loss for bailing his son Donald Trump Jr. out of a failed business to build prefabricated homes.
Trump also received tens of thousands of dollars in dividends while he was in the White House from trusts that had been established for him when he was young, his tax returns show.
Tax returns are among the most privately held documents in the United States. Although Congress has the power to obtain and release them, it rarely takes such action.
After Trump broke with tradition and declined to release his returns as a presidential candidate or while he was in office, Democratic lawmakers sought them out of concern about potential conflicts of interest. Ultimately, they were able to unlock them using their oversight powers through the inquiry into the Internal Revenue Service’s policy of auditing presidents and vice presidents.
The final release came after years of legal battles and speculation about Trump’s wealth and his financial entanglements.
Democrats cast the disclosure as necessary oversight of a president who broke decades of precedent in declining to release his returns.
But Republicans warned Democrats that they had set a dangerous precedent. The Republicans issued a report of their own on Friday that included detailed complaints about the process leading to the disclosure of the documents.
“Going forward, all future chairs of both the House Ways and Means Committee and the Senate Finance Committee will have nearly unlimited power to target and make public the tax returns of private citizens, political enemies, business and labor leaders, or even the Supreme Court justices themselves,” Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said in a statement preceding the report.
Trump also raised the threat of retaliation.
“The Democrats should have never done it, the Supreme Court should have never approved it, and it’s going to lead to horrible things for so many people,” he said in his Friday news release. “The great USA divide will now grow far worse. The Radical Left Democrats have weaponized everything, but remember, that is a dangerous two-way street!”
As a presidential candidate in 2015, Trump said he would not take “even one dollar” of the $400,000 salary that comes with the job. “I am totally giving up my salary if I become president,” he said.
In his first three years in office, Trump said he donated his salary quarterly. But in 2020, as the pandemic recession swiftly descended during his last year in office, Trump reported heavy business losses, no federal tax liability and nothing in donations to charities.
In the earlier years, White House officials made a point of highlighting which government agencies were receiving Trump’s salary, starting with the National Park Service in 2017. The tax documents released Friday show that Trump reported charitable donations totaling nearly $1.9 million in 2017 and just over $500,000 in both 2018 and 2019.
The tax law Trump signed in late 2017, which took effect the next year, appears to have yielded mixed results for him. Some of its provisions most likely gave him an advantage at tax time — including the scaling back of the alternative minimum tax on high earners.
But the law also included a limit on the so-called SALT deduction, which disproportionately hit higher earners, including Trump, in high-tax cities and states like New York. In 2019, Trump reported paying $8.4 million in state and local taxes. Because of the SALT limits included in his tax law, he was able to deduct only $10,000 of those taxes paid on his federal income tax return.
Trump’s returns are complex, sprawling across thousands of pages. The documents show he has switched accountants to compile them.
For years, Trump used the accounting firm Mazars USA to prepare his taxes and those of his businesses. Donald Bender had long been listed on the former president’s taxes as his accountant.
The firm formally cut ties with Trump and his businesses this year, saying it could no longer stand behind a decade of annual financial statements it had prepared for the Trump Organization.
But it turns out Mazars and Trump had begun distancing themselves from each other as early as 2020. That year, BKM Sowan Horan, a Texas-based accounting firm, prepared Trump’s taxes, his returns show.