Commentary

Trump And Taxes: "Genius" Or "Incompetent Failure"?

by Philip Rosenstein , Staff Writer, October 3, 2016

The 1990s were tough for Trump businesses, with bailouts and bankruptcies plaguing his professional endeavors for years. After receiving $65 million in loans and credit in 1990 to prop up his failing real-estate investments, he declared bankruptcy just nine months later, $4 billion in the hole.

There is no evidence that Trump ever filed for personal bankruptcy, but his Taj Mahal casino in Atlantic City took the brunt of the shortfall, filing for Chapter 11 bankruptcy. A number of other casinos and real-estate endeavors have faced a similar fate since then.

However, mismanagement of his businesses did take a toll on his personal finances. Due to the bankruptcy in 1991, he lost 50% of his investment in the casino and had to sell assets to stay afloat.

This was all public knowledge for those who cared to check his claims of unfettered business success.

Over the weekend, The New York Times came to possess pages from Trump’s personal 1995 tax return, in which they found a Trump-sized number in the personal liability row: $916 million. That’s just for one year.

According to tax experts, through some tax alchemy only available to the wealthy, declaring a loss that size could have allowed Donald Trump to forgo over $50 million in taxable income over the next 18 years.

We don’t know how much his taxable income burden may have been over the years, as he consistently refuses to release his returns, but one can assume the possibility of paying virtually no personal income tax for at least many of those years. All the while shortchanging real-estate developers, his employees and investors.

The reactions to these revelations have been much like the various reactions to Donald Trump throughout the campaign: either he’s a genius or a complete farce.

Chris Christie was given the daunting task of being the first Trump surrogate to address the NYT claims. On ‘Fox News Sunday,’ Christie explained that what the report “shows is what an absolute mess the federal tax code is and that’s why Donald Trump is the best person to fix it. There is no one who has shown more genius in their way to maneuver around the tax code.”

It is incredible, that as a trained lawyer, Christie doesn’t seem to appreciate that people of Trump’s wealth hire armies of tax lawyers to do their taxes. It is inconceivable that Donald Trump himself came up with the plan.

Appearing on ABC, Rudy Giuliani echoed Christie: “He’s a genius. … Absolute genius.”

The reaction from the other side of the political spectrum looks at the revelations differently. Sen. Harry Reid released a statement that read: “Trump is a billion-dollar loser who won’t release his taxes because they’ll expose him as a spoiled, rich brat who lost the millions he inherited from his father.” Adding that Trump is an “incompetent failure who managed to lose a billion dollars in a boom year.”

Whichever side you fall on, two facts are clear: Trump lost almost a billion dollars in one year and appears to have no intention of releasing the entirety of his tax returns, a first in modern presidential elections.

campaigns, finance, media, politics

3 comments about "Trump And Taxes: "Genius" Or "Incompetent Failure"?".

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Michael Strassman from Similarweb, October 3, 2016 at 12:56 p.m.
They're both right...pretty hard to claim being a business 'genius' if you lose a $1billion in a year, but he's right not to pay more taxes than he has to. But the defense that the govt squanders my money, so I don't believe in paying taxes is just BS. I'll be the first to admit that govt is full of waste and fraud, but that doesn't mean my tax dollars are utterly wasted. Who does Trump (or anyone who buys this line of reasoning) think is paying for police (law and order president, my ass), firemen, infrastructure, the military, and any number of services that keep this country (barely) functioning?
Reply

Steve Schiedermayer from Schiedermayer & Associates, Inc., October 3, 2016 at 1:39 p.m.

Hi Philip - am I wrong or did Hillary have a loss carryover of about $700k on her taxes? Did that lower her income, thereby reducing her tax liability? Same topic - it's good the NY Times never used any tax regulations to lower their tax liability - that would be hypocritical. Oops, looks like they did.

I'm just wondering if, as a journalist, you feel any obligation to put a counter-vailing opinion piece re: Hillary. So she's responsible for not paying for police too?

Philip Rosenstein from Law360 replied, October 3, 2016 at 2:51 p.m.

Thanks for the comment, Steve - you are right, the Clintons did have a $700,000 loss on their 2015 tax return. From what I've read, however, they only claimed $3,000 of that as a deduction - seen here on the first page of their return, line 13.
https://m.hrc.onl/secretary/10-documents/01-health-financial-records/Clinton_2015_Form_1040_with_Signature_Page.pdf
Hillary Clinton's federal income tax burden in 2015 was $3.2 million, so no, she is not responsible for not paying for police too. We know the Clintons have paid between 25% and 38.2% effective federal tax rate since 2001 - and that's because they've released their returns.