By Edward Keenan
Monday September 28, 2020
Will new revelations about Donald Trump’s paltry tax bills or his business losses make any impression on his supporters? Maybe, but don’t bank on it, Edward Keenan writes. STEVE RUARK / THE ASSOCIATED PRESS
WASHINGTON—President Donald Trump paid $750 (U.S.) in federal income taxes in 2016. Total, for the entire year. Same thing in 2017. And that was after many years in which the self-proclaimed multibillionaire paid a nice, round $0.
This, according to the New York Times, which on Sunday published a bombshell report after analyzing two decades’ worth of Trump’s tax returns, ones he has been fighting to conceal from both Congress and the public.
Now, many Canadians might be thinking to themselves that the U.S. does have lower tax rates than Canada — they don’t have socialized medicine, after all. But they sure aren’t that much lower.
In fact, many Americans may be thinking to themselves — those who don’t have gold-plated toilets and personal jets, and who, for instance, don’t spend $70,000 on hairstyling and then write it off as a business expense — that they pay a heck of a lot more than Trump does.The average American household pays federal income taxes of about $8,367, according to an analysis at the Motley Fool. Including state income taxes and payroll taxes like social security and Medicare, it’s just over $14,000.
Which means the average American is paying almost as much in federal income taxes each month as their jet-setting president pays in a year.
There’s a lot in the New York Times’ reporting on Trump’s tax returns. The complicated details in the more than 10,000-word report on the newspaper’s findings — and the further reporting it promises in the coming weeks — will yield a lot of headlines and controversy. Potential conflicts of interest. Questionable writeoffs about which Trump is fighting with the Internal Revenue Service. Maybe most glaringly, hundreds of millions of dollars in personal debt guarantees — owed to whom? it’s unclear — coming due in the next four years, which he has no obvious source of cash to pay off.
But stick your head up out of the weeds and the biggest message to average folks is that their president, whose primary source of fame was as a successful businessman and the most conspicuously, boastfully rich guy in all of conspicuously boastful rich-guydom, almost certainly pays less to Uncle Sam than the server who brings him Diet Cokes at Mar-a-Lago.
There are two possible conclusions you could draw from that. One is that Trump is cheating — either outright or using the best loophole-hunting tax lawyers money can buy — to avoid paying his fair share. There’s a hint of that explanation in Trump’s earlier, pre-revelation bragging on the 2016 campaign trail that arranging things so he pays no taxes “makes me smart.”
The Times notes that an earlier president, Richard Nixon, inspired a huge scandal in 1973 (another huge scandal, that is) when it was revealed he paid only $792.81 in taxes on $200,000 income due to a large single-year writeoff for the donation of his personal papers. (Incidentally that would be more than $2,500 in 2020 currency, adjusted for inflation.) That outrage was the reason presidential candidates started releasing their tax returns, a tradition Trump has conspicuously failed to uphold.
That tradition is why the public has a tweet from Trump, outraged over Barack Obama’s tax returns from 2011, when the then president paid $160,000 in federal taxes on roughly $790,000 in income. “Do as I say not as I do,” Trump’s scolding then said. But what Trump did, apparently, was pay way, way, way less himself in the Oval Office.
The other possible conclusion is that Trump is just a phenomenally bad businessman. The Wayne Gretzky of losing money. His outrageously high business losses are the reason he is able to pay so little in taxes on income in the hundreds of millions of dollars.
(Incidentally, it isn’t the case that every rich person gets away without paying taxes — though they are famous for finding ways to avoid them. Apparently, the average tax rate paid among the top one per cent of earners in the U.S. is 27 per cent. In 2016, famous, actually successful businessman Warren Buffett paid $1.85 million in taxes, and complained it was outrageously low for a man of his wealth.)
Anyhow, it appears that either Trump is scheming his way out of his fair share of taxes, or is an astounding failure in business, or both.An obvious question is whether that will make any impression on the legions of Trump fans — whose nationalism and outright racism have often been attributed to “economic insecurity” in the press.
And the answer is maybe. After all, if some autoworker in a MAGA hat opens her pay slip and sees her tax deductions this year are many multiples what Trump paid in the first two years of his presidency, maybe she has a think on it. But the further answer is Joe Biden supporters shouldn’t bank on it.
Because nothing that this year has thrown at American voters — pandemic, recession, civil rights protests, impeachment trial — has seemed to shift a single vote. On Sept. 27, 2019, Trump’s support in the poll average at Real Clear Politics was 42 per cent. On Sept. 27, 2020, it was 42.8 per cent. In statistical terms, the needle has not moved after a year widely agreed to be the most traumatically eventful in memory.
But in considering the question — which will be answered by voters, not analysts and pundits on cable TV and in your newspaper — it is interesting to note that Trump himself may have thought this information could hurt him if voters saw it. After all, if he was proud of paying so little on income so large because of business losses so profound, why fight the release of these returns for so long?