Special Bulletin. Is Donald Trump a Tax Cheat?

Is Donald Trump a tax cheat? The answer is that we don’t know, and if Trump has his way, we won’t find out until after the Republican primaries and convention, and the general election, have safely passed.  There is, however, every reason to be concerned and suspicious about Trump the Taxpayer.PIC Trump Tax Return

At Thursday night’s debate, Trump said that he could not release his tax returns because they were being audited. Three facts stood out immediately. First, after months of evasions and serially inconsistent responses, this was the first time that Trump had disclose that he was being audited and claimed that the auditing prevented him from releasing his returns. Second, the auditing process does not in any way prevent Trump from releasing his returns. Third, there is no reason to expect the auditing process, which according to Trump involves several years, to be completed before November. In short, Trump’s latest evasion should increase, rather than relieve, the growing pressure on him to release his returns.

Those returns are clearly germane to Trump’s candidacy. As Mitt Romney pointed out this week. There is good reason to suspect that the returns contain a “bombshell.” Whether a large bombshell or a modest one cannot be said, but Romney noted some of the modest possibilities:

Either he’s not anywhere near as wealthy as he says he is, or he hasn’t been paying taxes we would expect him to pay or perhaps he hasn’t been giving money to vets or to the disabled like he’s been telling us he’s been doing.

One other similar point. Since Trump is making much of his personna as a “Christian,” including the ludicrous claim that his identity as a “strong Christian” is a reason for his audits, it would be interesting to know how much he has donated to Christian churches or other organizations. But the most interesting possibility by far is that Trump  failed to pay taxes that he lawfully owed until he was forced to do so by an IRS audit.

Back on January 16, in Blog No 90,  we made the following observation:

Trump has said that it is his practice is to “fight like hell to pay as little as possible” and we would be quite surprised if there were not some questionable judgment calls made in pursuit of that goal.

Although the issue was obvious to us, the political world was slow to to wake up. Finally, however, the awakening arrived. In an editorial on February 19, The Wall Street Journal  pointed out that “If Mr. Trump’s tax records are as ‘very beautiful’ as he says, he should be eager to release them for public scrutiny.” When Trump responded by evading a question from George Stephanopoulos, and making  a predictable attack on the Journal, the editors warmed to the to the subject with a February 23 editorial, “Donald Trump’s Tax Return Dodge”:

As the potential GOP nominee, [Trump] owes the details to Republicans so they know as much as they can about the man who would be President. Is there something in those tax returns you want to hide, Mr. Trump?

In the meantime, on February 21, the redoubtable George Will had chimed in:

In 2011, Trump said he had dispatched investigators to Hawaii to unearth the sinister truth about Obama’s birth. He said, “They cannot believe what they’re finding.” No one has seen his astonishing discoveries — or his tax filings, which might illuminate unsavory business practices and exaggerations of his wealth. He thrives by determining the campaign’s conversation. It is time to talk about his tax records.

And on February 23, Ed Rogers writing in The Washington Post echoed Will and also noted that there were growing questions as to how Trump planned to fund a general election campaign, “There are already whispers coming from New York and elsewhere that Trump doesn’t have the wealth or certainly the liquidity he says he does.”

In the meantime, Trump had bobbed and weaved, attempting to sidestep the issue. When George Stephanopoulos initially raised the question with Trump on October 4, Trump parried it with a stunning non sequitur, saying that he would release his returns once “we find out the true story on Hillary’s emails.” Stephanopoulos allowed Trump to get away with that evasion, but even Trump could not bring himself to repeat it. Rather, he shifted to the claim that he was “working on” releasing his tax returns:

January 24: “We’re working on that now. I have big returns, as you know, and I have everything all approved and very beautiful and we’ll be working that over in the next period of time.
February 28: “I’m working on it. We’re working on, they’re massive.”

In neither case did the interviewer summon the wit or courage to inquire just what needed “working on” in order to release previously filed tax returns. Nor did Trump make any mention of ongoing audits.

On Thursday, the 25,th earlier in the day of the most recent debate, CNN reported that, despite Trump’s previous assurances, the returns might not be released after all:

Trump left the door open to not releasing his tax returns Wednesday.

The GOP front-runner told CNN that he will “make a determination over the next couple of months” as to whether he will release his tax returns.

By that evening, however, Trump had concluded that he could not get away with simply stonewalling and, when the predictable question was asked, resorted to the auditing excuse. Now it was no longer a question of “making a determination” — whatever that might have meant—but simply waiting for the audits to be completed. As we noted, however, there is no reason to expect that process to be completed in time for voters to assess candidate Trump’s performance as a taxpayer.

As The Wall Street Journal explained on Friday, Democrats have gone lightly on Trump’s problem lest they damage his chances to become the Republican nominee they most hope to run against. But if Trump does become the nominee, the kid gloves will come off quickly:

[N]ote that Mr. Reid has nothing to say about Mr. Trump’s taxes. That will come later—after the New Yorker has the GOP nomination. Then Democrats will do the vetting on Mr. Trump that his Republican competitors have failed to do.

At the Thursday debate, Senators Rubio and Cruz offered robust attacks on Trump on his tax returns and other issues. We think that those attacks should have had some effect and must continue. And while we sympathize with Governor Kasich’s desire to avoid participating in a noisy food fight, he too must weigh in if he hopes to be taken seriously as a candidate. 

With respect to Trump’s tax returns in particular, we are hopeful that the drumbeat of criticism will continue and grow louder, forcing Trump to make a full disclosure of his returns. In the meantime, there are two questions that should be put to the Trump campaign immediately:

  • What exactly are the years for which Trump’s returns are being audited and did each audit begin?
  • What is the last year for which Trump was was audited and the audit closed? Is there any reason not to release the return for that year (and disclose any adjustments made as a result of the IRS audit)?

We will stay tuned.

8 thoughts on “Special Bulletin. Is Donald Trump a Tax Cheat?

  • Much has been made in the media about Donald Trump being a narcissist. His candidacy has deeply troubled the GOP as he has himself constantly been producing headlines and taking the stage from the other candidates. As a result he has bought few political ads since the media is doing the job for him. So what does this have to do with calling him narcissistic? How are these related? A little research in the psychiatric literature is quite revealing. According to the Diagnostic and Statistical Manual of the American Psychiatric Association, the essential feature of a Narcissistic Personality Disorder is a pervasive pattern of grandiosity (e.g. “I am going to build a wall, it will be beautiful, and the Mexicans are going to pay for it!”), a need for for admiration, and a lack of empathy; it includes a grandiose sense of self-importance, routinely overestimating their accomplishments, and appearing boastful and pretentious. They often brag of unlimited success (being a billionaire), power, brilliance, superior, arrogance, have a lack of empathy, and denigrate others as being stupid, weak, flawed in some way (looks or physically). They may act with disdain , rage, or defiant counterattack. In this political campaign season, he has shown himself to be a master of media-manipulation which has brought excessive admiration, constant attention, an exaggerated sense of self-importance which muddles whether it is commensurate with actual achievements. He has tapped into the real needs of people who feel disregarded and/or angry and used this to manipulate them to his advantage without producing any doable solutions or programs to support his claims. In my view, I do not see how these traits are compatible with the role of the President of the United States in dealing with Congress or foreign governments. The journalists and columnists who perceive this have got it right!

  • What cynicism! A patriotic, selfless citizen like Mr. Trump cheating on his taxes? Why, I am certain that when and if the tax returns are released we will find scrupulous attention to tax mitigation which may appropriately described as huge, spectacular and/or extraordinary. But improper? Illegal? In that unlikely event, I am certain that the problem will lay at the feet of the accountants and tax lawyers on whom Mr. Trump reasonably relied.

    • Expect Trump to chastise his accountants and/or tax lawyers should any improprieties surface. He will make them pay dearly, along with any penalties imposed because he’ll claim to be a “Born Again Taxpayer” as a result some stupid IRS oversight years ago which was also not his fault.
      Case closed!

  • Another issue I am appalled the news media has failed to follow up on is just how Trump intends to get Mexico to pay for a wall sealing off the border. Former presidents Fox and Calderon have declared emphatically that Mexico will NOT pay for any wall.

    If Trump wins the nomination, his backers will deserve what they get, but what about the rest of us?

    • I thought it was obvious, based on the fact that every time this question is asked, he refers to the annual trade imbalance we have with Mexico – he’s going to collect a “wall” tariff. It may be illegal, but I think that’d be his answer.

  • If you think Trump’s tax returns will tamp the support of his constituency even one little bit, you probably don’t understand his constituency, at all. In fact, I suspect a little overly aggressive tax positioning will actually help him. I thought Rubio bloodied him more than a little last night but the Christie thing is a total game changer. I had hoped Christie would stand up for his friend (and my favorite) Kasich, but the falling dominoes are starting to pick up speed and the result seems inevitable. [insert sad, disappointed emoticon right here]

  • I have a client (a fellow Hackley alum) who went to Penn. He says that Penn always makes a big deal when Trump visits but that he has never, at least recently, given Penn a dime. Interesting.

  • Welcome Home and excellent analysis as always. Am hoping against hope that enough voters in the Republican arena find this troubling enough to look a little deeper into this candidate. Empty suit, empty suit, empty suit!

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