215. Trump Tax and Finances

30 Sep

ADDED on Oct. 9, 2020. The NY Times documents additional tax factors not discussed below. Also, consider testimony re taxes by Michael Cohen, Trumps lawyer. Alleged is that property values were altered to lower taxes. Oct. 9, 2020

It seems that some popular commentators do not understand how to interpret the latest information on Trumps tax and finances. I have run two small businesses and have had some of the same tax features as the President. However, there is one important difference between me and Trump, my businesses were profitable, I paid substantial taxes, and I was a very cautious investor. Many years ago, I had some investment losses, so I understand how losses can be carried forward.

First, I will try to clarify the tax concept of “carryover.” According to Investopedia, “A tax loss carryforward (or carryover) is a provision that allows a taxpayer to carry over a tax loss to future years to offset a profit.For example: Say you had a $50,000 loss this year due to the virus. There are limitations to applying this loss to this year’s Federal tax return. Next year, you make a profit of 120,000. Your tax basis (income minus expenses) for next year will be 120,000 less some loss carryover from this year. A carryover could erase all of your tax burden for next year, and up to seven future years for the IRS.

It appears that Trump has had several periods of major losses. He began his casino investments around 1984 with a property opened as Harrah’s at Trump Plaza. He ended up with four casinos, all of which went bankrupt. His TV show, The Apprendice ran from 2004 to 2017. He made a good profit from the shows, but invested much of it in golf courses, which mostly lost money. These major losses could be carried forward so that current taxable profits could be substantially reduced.

According to the NY Times (Buettner, Craig, and McINtire, Sept 27, 2020) in several recent years, Trump paid $750 in Federal income tax, and in many other previous years, no tax at all. There are two likely reasons for these low taxes. One would be major net losses for each year, or the second, a carryover of major losses from previous years (or both).

Assuming that Trumps tax reporting is accurate, one must conclude that overall, his finances were NOT profitable. Good, legitament profits generally require high tax payments. Also reported, is that in the next few years, major loans will be coming due.

The financial picture for Trump appears to be some good profits, that are offset by massive foolish investments. He apparently lied about his financial condition, giving the impression that he was a billionaire. After several promises, he never made public his tax returns and stated that they could not be released during an IRS audit. This was not true as there is no such rule. To be fair, it is true to his gross income was often very high, but in fact, his expenses were even higher, resulting in massive debts.

If the voters knew of his financial condition (very substantial debts and poor management) he would never have been elected. Furthermore, if he were properly vetted, he would not have been able to hold major public office. Persons with massive debts, are subject to blackmail and other negative influences. We could speculate that his unusual relationships with Russia and Turkey, could be explained by financial arrangements with these countries. There is much unknown and much to be investigated. But it is very clear, that his major debts and numerous international financial entanglements could influence decisions benefiting himself and not the nation. Also, he never fully disengaged from his businesses when he became President. That is a requirement of the office. His son-in-law also seems to have some similar financial problems.

Conclusion. Although Trump lives a wealthy life, he is NOT a good business man and not a wealthy person. So far, he has been very lucky, considering the many shady dealings he likely engaged in. His greatest skill is certain types of communication, which helped him develop a base of devoted supporters. His weakest area is a failure to study and properly address major challenges.

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