Tax evader, faux philanthropist, unsuccessful businessman: Reviewing Trump’s qualifications to serve as president

October 7, 2016

By Matthew E. Milliken
Oct. 7, 2016

In a little more than four weeks, Americans will choose the 45th president of the United States of America. I am, frankly, not wild about the Democratic Party’s nominee, Hillary Clinton, for whom I did not vote in the North Carolina primary election. But as regular readers will know, I have no love or respect for Donald Trump.

But even though I feel somewhat jaded about this presidential contest, every few days, at least one or two items come out — usually because Trump has done or said something outrageous or because reporters have uncovered one of Trump’s past exploits — that leave me astonished that the Republican Party decided Trump was a fitting candidate to lead the free world.

Here’s a recap from the past few days, mainly prompted by The New York Times’s receipt of leaked partial tax returns. The documents showed that Trump declared a loss on his 1995 income tax returns that was large enough to exempt him from paying federal taxes for 18 years.

Trump took advantage of loopholes that, while legal, are available mainly to people who are rich or who develop real estate or both. It’s long been suspected that Trump has evaded a great deal of tax liability, but the Times story lent additional credence to that notion.

Days before the Times published its scoop, in the first presidential debate, Trump seemingly confirmed that he had in fact avoided paying taxes. “That makes me smart,” Trump announced during the debate after Clinton accused him of tax avoidance. He later added that if he had paid taxes, they would have been “squandered.”

In keeping with Trump’s seeming inability to commit to anything beyond his need to inflate his own self-image, Trump began shifting his position shortly after the debate. He said “Of course I pay taxes” but then declined to answer a question about whether he’s currently paying federal income taxes.

So Trump suggests that he may or may not be taking advantage of loopholes, and he says that it would make him smart if he were, but he refuses to answer detailed questions about his tax returns. What’s more, Trump still refuses to release tax returns, something that Clinton and every other Democratic and Republican candidate have done since 1976.

Let’s turn to the matter of the Donald J. Trump Foundation. Its troubles are succinctly described in this Eliza Newlin Carney story in The American Prospect; also, a professor of law and a professor of accounting explore the matter in more detail in this piece for The Conversation. Although Trump hasn’t given to his namesake charity since around the time Obama was elected, nearly eight years ago, the foundation has accepted other people’s donations.

Those funds have been used for a variety of purposes. Some of the money has gone to organizations that seem to be engaged in substantial charity work. Some of it has gone to organizations that could boost Trump’s burgeoning political career. Some of it has also been used for suspicious purposes, such as an illegal $25,000 contribution to a political committee linked to Florida’s attorney general shortly before her office declined to join a multistate lawsuit accusing Trump Entrepreneur Initiative Trump University, of fraud.

Trump has also apparently urged people who owed him money to donate millions of dollars to his foundation in lieu of settling up with Trump himself or the business to which the payor was indebted. If these allegations are true, then Trump was using his charity to dodge taxes. (Remember, that’s the kind of thing that would make him smart.)

Also, Trump Foundation funds have evidently been used to pay settlements on lawsuits against Trump, to promote Trump’s businesses, to buy gifts that appear to be for display at Trump’s businesses or for his personal use, and to commission two portraits of Trump himself.

Remember, this money was originally given — little of it by Trump himself — to the Trump Foundation, an organization that is supposed to promote the public good. Keep in mind, too, that the foundation has no full-time employees and a five-person board member: Trump himself, three of his children and one of Trump’s employees. In other words, there’s a very small pool of people who can take responsibility, or blame, for the foundation’s deeds and misdeeds.

But let’s circle back to Trump’s partially leaked tax returns, which directly connect to the real basis for his presidential bid: His supposed business success. In his 1995 returns, Trump declared a net operating loss of $915,729,293. This sum was so large that, according to Trump’s accountant, it couldn’t be accommodated by his tax software and had to be supplemented by a manual typewriter. Alan Cole, a Tax Foundation economist, calculated that Trump’s loss represented 1.9 percent of all net operating losses declared in the United States that year.

Trump has, of course, made multiple bad investments, and as I’ve noted before, his casino businesses have filed for bankruptcy not once but multiple times. But there’s a bit more to the story than that. Trump built so heavily in Atlantic City, according to this New York Times deep dive, that his casinos competed both with each other and with those of his partners. Moreover, Trump’s casinos lost money at a time when other casino businesses were prospering.

But there’s still more to the story, as Brett Arends observed in MarketWatch this spring and as Matthew Yglesias wrote in Vox this week. Although Trump ran Trump Hotels and Casino Resorts into the ground, losing money each year he served as the corporation’s chairman, he extracted $44 million in salary and bonuses. In 1996, the year after Trump personally incurred that net operating loss of nearly $1 billion, Trump got a $5 million bonus and a 71 percent salary increase, even though the stock price of Trump Hotels and Casino Resorts had dropped 70 percent from its high in 1995.

Trump also got the company to assume, and in some cases actually pay, debts that had initially been incurred either by Trump himself or by his other businesses. As Yglesias wrote:

The company’s share price dropped because it was unprofitable. And it was unprofitable because it ended up assuming $1.7 billion in debt as part of its acquisition of formerly Trump-owned enterprises. Trump was, in essence, paying himself a high salary for the trouble of running a company whose main purpose was to take enormous bad debts off his personal balance sheet and shift them over to the company.

And the beat goes on. Trump also arranged for Trump Hotels and Casino Resorts to pay other Trump-affiliated enterprises handsomely to provide entertainment on his golf courses, transportation on his private plane and merchandise that bore Trump’s logo. These purchases included more than a million dollars of Trump bottled water.

One analyst concluded that a $100 purchase of Trump shares in 1995 would have seen their worth slump to just $4 in 2005. Over the same period, a $100 investment in MGM Resorts would have increased in value nearly six-fold.

Maybe I’m missing something, but none of this adds up to Trump being particularly successful, let alone to his being fit to serve as presidency. And I haven’t even mentioned Trump’s misogyny, bigotry, ignorance, laziness, extreme mendacity or rapidly changing policy positions. So tell me, please:

Why, exactly, was Donald Trump chosen to run for president by a major American political party?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: