Many of Donald Trump’s tweets aren’t worth paying attention to, but on Tuesday morning he posted a pair that demanded inspection. Like many other people, me included, the President had apparently been reading a story in the Times that punctured the mythology surrounding his business career. Based on Internal Revenue Service transcripts of Trump’s tax returns from 1985 to 1994, the Times report said that Trump’s core businesses racked up losses of more than a billion dollars in a ten-year period. During 1990 and 1991, the story said, Trump’s losses were so large that they “were more than double those of the nearest taxpayers in the I.R.S. information for those years.”
Trump could simply have ignored the report or dismissed it as old news. But, with cable-news networks featuring it prominently, and the Daily News, one of Trump’s home-town papers, running the front-page headline “BIGGEST LOSER,” he did what he usually does and counterattacked. This is what he wrote on Twitter:
Real estate developers in the 1980’s & 1990’s, more than 30 years ago, were entitled to massive write offs and depreciation which would, if one was actively building, show losses and tax losses in almost all cases. Much was non monetary. Sometimes considered “tax shelter” . . . you would get it by building, or even buying. You always wanted to show losses for tax purposes. . . . Almost all real estate developers did – and often re-negotiate with banks, it was sport. Additionally, the very old information put out is a highly inaccurate Fake News hit job!
The first thing to note about Trump’s argument is that, despite his parting jibe, he didn’t challenge any of the specific figures in the Times story. They show that, between 1985 and 1989, a period when the economy was forging ahead and Trump was busy portraying himself as a billionaire with the Midas touch, his core businesses—apartment buildings, hotels, and casinos—somehow managed to lose $359.1 million. That was only the beginning. As the economy weakened, in 1990 and 1991, Trump’s core businesses racked up losses of $517.5 million. And, between 1992 and 1994, as the economy recovered, they lost another $286.9 million.
By any standards, this is a lot of money to burn through. But what of Trump’s argument that they weren’t real losses of the sort that deplete your bank account and leave you struggling to make ends meet? Were they simply “tax losses”—“non-monetary” deficits that exploited loopholes in the tax code to minimize Trump’s tax burden?
The tax code is certainly friendly to real-estate developers like Trump. The I.R.S. allows developers and landlords to deduct from their profits and income every year a certain portion of the value of their buildings for “depreciation.” But there are limits to this practice. Owners of residential real estate have to depreciate a building over the course of twenty-seven and a half years, which means that each year they can deduct about 3.6 per cent of its value. For owners of commercial real estate, the depreciation period is thirty-nine years, which means that they can deduct about 2.5 per cent of a building’s worth annually. Say that a property is worth two hundred million dollars. If it’s a residential building, its owner can reduce his or her taxable income by about $7.2 million dollars a year. If it’s a commercial building, the deduction is worth about five million dollars.
These are significant sums, certainly. But, as the Times article points out, depreciation charges aren’t nearly large enough to create the massive losses that Trump’s businesses incurred. “Some fraction of Donald Trump’s losses can be attributed to depreciation,” Susanne Craig, one of the authors of the Times piece, wrote in a tweet, responding to Trump. “We found most of it was just bad business.”
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How do we know this? Trump’s financial troubles were public knowledge at the time. Things came to a head in the summer of 1990, when his businesses—which by then included three casinos in Atlantic City, the Plaza Hotel, and the Trump Shuttle airline—were so strapped for cash that they couldn’t meet their interest payments. Some of the dozens of banks that had lent money to Trump were threatening to foreclose on their loans, which could have caused a cascading chain of bankruptcies, including one for Trump personally.
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In May, 2019, this is all distant history, of course. But don’t let anyone tell you—not Trump, nor Newt Gingrich, nor any of the President’s other apologists—that the businesses Trump operated were successful, or that the huge losses they sustained were simply tax dodges. They weren’t.
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"Don't let anyone tell you—not Trump, nor Newt Gingrich, nor any of the President's other apologists—that the businesses Trump operated were successful, or that the huge losses they sustained were simply tax dodges. They weren't." https://t.co/43rOYFo0LB
— Kyle Griffin (@kylegriffin1) May 11, 2019
1. Rube Nation won't believe it, no matter how obvious it is.
2. People with this kind of money trouble are usually marked as a potential security problem. https://t.co/aLGMmCPA8f— Tom Nichols (@RadioFreeTom) May 11, 2019
This is a guy who really became a household name through reality tv. Since reality tv is fake, of course, the image of a successful businessman is phony too. I expect Trump lives large on borrowed money — possibly from Russian banks — plus cheating his vendors, suppliers and contractors, as well as any business associates, and cheating on his taxes. Whatever is supporting his lavish lifestyle — it isn’t through hard work and success in business. Most likely, whatever it is, it is unethical and maybe even illegal.
Of course, Trump fans don’t want to see this. They too support his hard line against releasing his tax and financial information. I think they know Trump is fake, but they don’t want to face the reality, so they don’t want Trump’s failures to be exposed, or perhaps they will be forced to admit he is a fraud. This will be devastating to many of them who worship Trump so fervently. I can see many of them hurling themselves off a cliff or ending up in a mental hospital. Trump fans are a cult and as in many cults, the followers can’t handle the stark reality that they have been duped. For them, their lives are so entangled with the cult leader that when the leader is exposed, their lives are over.
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