A recent report from The New York Times (NYT) claimed President Donald Trump paid no federal income taxes in 10 of the last 15 years and just $750 in federal income taxes in both 2016 and 2017.
While some on the left are using the allegations as political ammo, both Trump and Democratic nominee Joe Biden have managed to pay far less than the average Joe when it came to taxes. Whether the sign of smart businessmen or good accountants, both, according to reports, appear to have used fully legal loopholes.
While the NYT wouldn’t release the tax returns or name the person who gave them access to the documents, Trump and his companies allegedly reported massive losses over the years which mitigated the monies he would have had to pay in yearly federal taxes, according to the report. Trump allegedly also listed personal expenses as business expenses, which were then written off by his businesses.
The president is also under audit from the IRS regarding a $72.9 million tax refund that he claimed, and received, after declaring losses, per the report. (RELATED: FLASHBACK: Trump Brags About Avoiding Taxes, Says Paying Them Guarantees They’ll Be ‘Squandered’)
The report said the president was able to avoid federal income taxes by “using the proceeds of his celebrity to purchase and prop up risky businesses, then wielding their losses to avoid taxes.” However, the report then immediately noted that Trump was able to do the aforementioned due to tax codes which allows business owners to “carry forward leftover losses to reduce taxes in future years.”
By the end of 2015, the president had 15 golf courses and was working on building the Trump International Hotel in Washington, “but rather than making him wealthier, the tax records reveal as never before, each new acquisition only fed the downward draft on his bottom line,” the Times reported.
Tax loopholes allow for real estate developers like Trump to use their losses to reduce their taxable income, per the same report. Further, the NYT reports that Trump did pay a tripwire tax called the Alternative Minimum Tax which is meant to prevent wealthy people from using huge deductions to clear them of financial obligations. Between 2000 and 2017, Trump paid $24.3 million.
Democratic New York Rep. Alexandria Ocasio-Cortez claimed that Trump contributed less than waitresses and undocumented immigrants, despite the NYT reporting Trump paid millions in other taxes.
“In 2016 & ’17, I paid thousands of dollars a year in taxes *as a bartender.* Trump paid $750. He contributed less to funding our communities than waitresses & undocumented immigrants. Donald Trump has never cared for our country more than he cares for himself. A walking scam.”
In 2016 & ‘17, I paid thousands of dollars a year in taxes *as a bartender.*
Trump paid $750.
He contributed less to funding our communities than waitresses & undocumented immigrants.
Donald Trump has never cared for our country more than he cares for himself. A walking scam. https://t.co/VZChbp8htu
— Alexandria Ocasio-Cortez (@AOC) September 28, 2020
Speaker of the House Nancy Pelosi said Trump had abused the tax code.
“It is a sign of President Trump’s disdain for America’s working families that he has spent years abusing the tax code while passing a GOP Tax Scam for the rich that gives 83 percent of the benefits to the wealthiest 1 percent.”
It is a sign of President Trump’s disdain for America’s working families that he has spent years abusing the tax code while passing a GOP Tax Scam for the rich that gives 83 percent of the benefits to the wealthiest 1 percent. https://t.co/FXfxlc7wfY
— Nancy Pelosi (@SpeakerPelosi) September 28, 2020
Biden has avoided paying into the system by using a legal loophole, as well. The taxes he is avoiding would otherwise be used to fund Obamacare, according to a report by The Federalist.
“Chris Wallace ignored Donald Trump’s answer about paying “millions” in taxes during, repeatedly demanding that the president answer a question he’d already answered. Meanwhile, the person who really should answer for his tax returns is Joe Biden.”https://t.co/8W27R8RaH1
— Mollie (@MZHemingway) September 30, 2020
Biden and his wife Jill avoided a 3.8% self-employment tax by routing their book and speech income — which reportedly drew $13 million in profits — through S-corporations, according to The Wall Street Journal.
The legal move saved them at least $500,000. The loophole works by allowing S-corporation owners to avoid the tax as long as they pay themselves “reasonable compensation” which is subject to regular payroll taxes, per the same report. S-corporations are not subject to Social Security and Medicare tax, but the salary the business owner gets paid is subject to Social Security and Medicare tax.
According to Biden’s 2017 Tax Return, the Democratic nominee paid $3,744,640.00 in taxes.
The Tax Policy Center (TPC) estimates that in 2018 44% of Americans paid no federal individual income taxes. According to the TPC, many Americans skate by federal income taxes through a combination of personal exemptions, the standard deductions and tax credits. Further, TPC reports that most people who don’t pay federal income taxes do still pay state income taxes, sales tax, excise taxes and property taxes.