Did Trump break the law with his taxes? How he got away with paying so little

·5 min read

The House Ways and Means Committee has finally released six years’ worth of Donald Trump’s federal income tax returns in one of its last acts under Democratic control.

The ex-president’s personal and business returns, partially redacted to conceal sensitive information, cover 2015 to 2020, from Mr Trump first descending the golden escalator at Trump Tower in New York City to announce his intention to run for the presidency to his failure to secure a second term not long after recovering from Covid-19, setting in motion the bogus election fraud claims that would lead to the deadly assault on the US Capitol by his supporters the following January.

The sheer complexity of the former property mogul’s business empire means it will take time to pore over the nearly 6,000 pages of figures in detail but what is immediately clear is that he actively pursued legal but creative accounting strategies to ensure his federal tax contributions were kept as low as possible.

While Mr Trump paid $641,931 in federal income tax in 2015, he paid just $750 in 2016 and 2017 and none whatsoever in 2020.

He did pay almost $1m in 2018 and $133,445 in 2019 but, as a proportion of his earnings, those are small amounts.

That first figure, for instance, represents just 4 per cent of the $24.3m he reported in income that year at a time when an average American worker would have expected to pay 13 per cent, according to Internal Revenue Service (IRS) calculations.

Like the tax revelations published by The New York Times in September 2020, which suggested he had paid no tax in 11 out of the previous 18 years and was facing having to repay hundreds of millions of dollars in loans, the new filings reinforce the impression that Mr Trump’s nebulous property portfolio, consisting of luxury houses, hotels and golf resorts around the world, has consistently lost money since he entered politics.

They also find him still drawing income from his stint hosting NBC’s The Apprentice and from licensing his name commercially.

There was no evidence of wrongdoing immediately apparent within the new filings, but they do find Mr Trump employing strategies such as carrying over losses from one year to another in order to reduce his tax liability, with a $700m loss sustained in 2009 at the height of the Great Recession apparently the source for much of this.

That said, the House committee points in its report accompanying the release to a pattern of what it considers to be questionable claims worthy of further investigation, such as professional expenses and charitable deductions made without the necessary documentary evidence on hand to support them, what might prove to be “disguised gifts” to his adult children Don Jr, Eric and Ivanka and the canny capitalising on real estate write-offs available in his native New York.

Mr Trump claiming tax credits of $7.4m during his presidency in 2017 for the renovation of the controversial Trump International Hotel in Washington, DC, a district in which allowances are made for work restoring historic buildings, might also merit further inquiry, the committee suggests.

The release also revealed that Mr Trump had foreign bank accounts in China, the UK, Ireland and St Maarten, and that in the first year of his presidency, 2017, he paid more tax abroad than in the US.

The 45th commander-in-chief has already responded angrily to the release of the documents, declaring that the House committee “should have never done it” and the US Supreme Court “should have never approved” the move, as it did in November.

He warned that the release of his tax filings will “lead to horrible things for so many people” and cause divisions in the US to “grow far worse”.

“The radical, left Democrats have weaponized everything, but remember, that is a dangerous two-way street,” the ex-president cautioned, while also insisting that the returns demonstrate that he has been “proudly successful” and only serve to illustrate the way he has “been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs and magnificent structures and enterprises”.

It is unlikely the Ways and Means Committee will pursue questions about Mr Trump’s financial affairs further once the 118th Congress convenes on 3 January 2023 and the panel falls into Republican hands, given that the GOP has decried the release as an invasion of the former president’s privacy.

However, the Democrats having retained the upper chamber of Congress in the wake of last month’s midterms – when so many right-wing candidates handpicked by Mr Trump himself failed at the final hurdle – means that the Senate Finance Committee could still chase down alleged irregularities.

Mr Trump’s tax returns have been a running saga ever since he first announced his candidacy seven years ago.

He initially promised to release them in the interests of transparency, as every president has done voluntarily since Jimmy Carter in 1977, only to then renege on the pledge and insist they were under audit by the IRS.

We know that that was actually true – in spite of a post-Watergate rule requiring the mandatory audit of all presidents’ and vice-presidents’ returns every year, a failing that poses questions about why the IRS neglected to act and whether its resources are sufficient – although that fact still would not have prohibited him from releasing them.

The issue gained new momentum after the 2018 midterms when the Democrats regained control of the House and Richard Neal became chair of the Ways and Means Committee, issuing a formal request to then-Treasury Steve Mnuchin for the release of Mr Trump’s papers in April 2019, which was refused.

That sparked off a long-running series of court battles, with the Democrats citing a 1924 law empowering congressional tax committees to obtain any individual’s returns, and which only ended with the Supreme Court’s final ruling in November.

“A president is no ordinary taxpayer,” Mr Neal said in a statement on Friday.

“They hold power and influence unlike any other American. And with great power comes even greater responsibility.”

The returns’ publication at last brings an end to his pursuit but, as ever when Donald Trump is concerned, one suspects this is not the end at all, merely a new beginning.