Opinion | Trump Is a Bad Businessman. Is He a Tax Cheat, Too?
The latest bombshell Times story on the president’s tax history confirms what we already suspected: Donald Trump is a terrible businessman. Despite inheriting more than $400 million and being bailed out by his father at critical junctures, he managed to lose (or at least claim tax losses) of more than $1 billion over a decade. The latest story also shows how we do a terrible job of adequately taxing the wealthy. The 400 richest Americans often pay tax at lower rates than the middle class because so much income from wealth is taxed at low or zero rates.But perhaps most important, the story reinforces the need for a congressional investigation of the president’s tax returns.President Trump is not just a run-of-the-mill multimillionaire, paying taxes at a low rate. As the Times has documented, there is ample evidence that his father’s estate — of which he was the executor — engaged in tax evasion and outright fraud, failing to pay about $500 million in estate taxes. Other reports have documented numerous instances where Mr. Trump has taken sketchy or unlawful tax positions. His former attorney Michael Cohen effectively suggested during his congressional testimony that Mr. Trump engaged in tax fraud and insurance fraud.The latest revelations about the president’s eye-popping tax losses provide fresh grounds for concern that he has violated tax laws: Claiming large tax losses is one of a handful of positions taxpayers must automatically disclose to the I.R.S. as potentially abusive tax shelters.The president claims that all his relevant tax returns have been audited or are under audit now. But even if true, this provides little comfort. The I.R.S. is so under-resourced that even when it does audit high-wealth individuals, it may miss violations of the law, or worse. Fred Trump’s estate is a case in point.President Trump also is not a run-of-the-mill wealthy man because he is, well, the president of the United States. He has vast power and influence. There is ample reason to fear that conflicts of interest have infected his approach to tax policy.When campaigning, Mr. Trump promised to close tax loopholes based on his expert knowledge of them. But instead, the 2017 tax bill seemed designed to lower taxes on him and his family through special carve-outs.The bill lowered the top tax rate from 39.6 percent to 37 percent. But it was far more generous to the wealthy who, like the president, structure their businesses to pay tax on a so-called pass-through basis. They gained a whopping 20 percent deduction on their income.While the bill placed limits on wealthy taxpayers claiming this deduction, there was a special carve-out for real estate — the main source of Mr. Trump’s wealth. As a result, the bill cut the top rate on people who, like the president, own pass-through businesses in the real estate industry all the way to 29.5 percent.And that’s just the start. The 2017 bill also repealed the “like-kind exchange” rule for all property except, you guessed it