President Trump has long maintained that, to the extent he hasn't paid taxes, it's because he's a savvy and intelligent businessman. When Hillary Clinton pointed to reports that Trump didn't pay any federal taxes over a few years during one of their 2016 debates, Trump replied, "That makes me smart."
Now we have extensive evidence the truth is more or less the opposite.
Close observers of Trump's business career will not be surprised by any of this. We've known for years that his real estate career in particular was riddled with bad debts and bankruptcies. But the mythos of Trump as a successful self-made billionaire has been a key part of his political rise.
Now, thanks to a blockbuster new report from The New York Times, we can flesh out just how far that mythos is from the truth.
Apparently, the Times got ahold of some of Trump's IRS paperwork from 1985 to 1994 — a time span that covers some of his most famous real estate and Wall Street projects. It turns out Trump was constantly losing money, in the tens or even hundreds of millions, the whole time. "Year after year, Mr. Trump appears to have lost more money than nearly any other individual American taxpayer," the Times said.
For eight of those ten years, Trump avoided paying income taxes entirely. (Though later IRS audits may have changed that figure.) But his low tax bill wasn't really due to Trump working the system. Instead, his business endeavors simply bled so much money that the red ink wiped out his tax liability.
Over the whole decade from 1985 to 1994, Trump's cumulative losses amounted to a whopping $1.17 billion. A crucial detail is that Trump reported his business income as "pass through" — a category that passes a business' gains or losses on as personal income gains or losses to the owner, rather than taxing them separately under the corporate income tax. Thus, while this was Trump's personal tax liability, it benefited from a few perks for businesses embedded in the tax code. One of these perks is the ability to carry over losses from year to year and use them to reduce what you would owe on future years' income. (It's just one example among many of how our tax code gives rich Americans and business owners a sweeter deal than regular taxpayers.)
As a result, while Trump's total actual losses for the decade were just over a billion, he was able to compound the reported loss for each individual year. Those reported losses bounced around between a (relatively) modest $4.5 million and $99.6 million from 1985 to 1989. Then they jumped to $400 million in 1990, and continued to balloon from there, reaching $918 million in 1994. Thanks to a previous Times report, we already knew that Trump's reported losses in 1995 amounted to $915 million — a sum that could've theoretically wiped out hundreds of millions in tax liability for Trump over the following years.
The losses straddle some of Trump's most famous projects from the late 1980s and early 1990s. In 1985 he purchased the Mar-a-lago property in Florida, which didn't make him money for another ten years; there was his purchase of an old New York hospital he tried to replace it with apartments, before the project stalled for years; there was Trump's ownership of the New Jersey Generals in the United States Football League, the latter of which would soon go under; there was the shuttle operation he acquired from Eastern Airlines in 1989, which never turned a profit; and then there was Taj Mahal Hotel and Casino, which debuted in 1990 with so much debt that it not only collapsed under its own financial weight, but dragged some of Trump's other properties into debt as well.
The tax documentation also covers an interesting period from 1986 to 1989, where Trump tried to supplement his income by playing the stock market. He'd buy up some shares in a company with borrowed money, then publicly threaten to buy more until he was a majority owner, relying on his reputation as a real estate tycoon to juice the market enthusiasm. Then he'd sell the stock he'd already purchased after the price rose. The gambit worked a few times before investors got wise to the fact that Trump was always bluffing. Eventually, some of the stocks he was holding onto cratered before he could sell them, offsetting pretty much all the money he'd gained with the strategy.
This mix of self-promotion, shamelessness, and brazen irresponsibility shows up in Trump's well-documented history dealing with small businesses and contractors as well. From his personal driver, to a toilet maker in Atlantic City, to drapery business in Las Vegas, to a Philadelphia cabinet maker and more, Trump had a habit of either disputing the work they did on questionable grounds or just failing to pay them entirely. Then he would rely on time, plus his sizable connections and financial resources, to wear down anyone who took him to court. An investigation by USA Today actually found that Trump was involved in more than 3,500 lawsuits over the last 30 years.
Fittingly, once Trump got out of actual real estate deals and business ventures, and shifted over to reality television and merely licensing his name and brand, he seems to have become far more successful. By 2005, according to portions of his tax returns unearthed by reporter David Cay Johnston, Trump was enjoying a positive income flow again, and paying income taxes. Meanwhile, Democrats are on a quest to dig up Trump's more recent tax returns; not so much because they want to prove he was a business failure, but because they suspect he's receiving unconstitutional payments from foreign powers (another thing we already have credible evidence for) or may have even been involved in money laundering.
Still, it's worth contemplating how the projects in the 1985-to-1994 time span, themselves largely funded by suspect wealth Trump inherited from his father, laid much of the cultural foundation for Trump's reputation, which he then parlayed into his current brand-name business and political career. It's not coincidental that Trump's lawyer told the Times, without further explanation or evidence, that its latest reporting was "demonstrably false." (The paper lays out extensive reasons why it disagrees.) These revelations may not put Trump in legal or constitutional jeopardy, but they cut to the core of his personal mythos.
Anyone paying attention should've known that Trump was a fraud and a con artist all the way down. But now the receipts are coming in.