Yet Trump characteristically pushed those strategies to the limit, perhaps to the breaking point.
So say tax experts in the wake of a New York Times report Sunday that found that Trump paid only $750 in taxes in both 2016 and 2017 — and none at all in 11 of the 18 years that the newspaper examined.
“The things that Trump did are typical of wealthy businesspeople and particularly wealthy real estate developers,’’ said Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy.
Still, Wamhoff noted, Trump claims “the special breaks and loopholes that are available in the tax code and sometimes just takes them to a whole new level.”
U.S. tax law has long been kind to big real estate developers. It allows them myriad legal loopholes and breaks that can significantly shrink their tax bills. The law became even kinder to them after Trump’s Republican allies in Congress pushed through his $1.5 trillion tax overhaul, which took effect in 2018.
The Times reviewed Trump’s tax returns for 2000 through 2017, so its report didn’t capture the impact of the 2018 law. But Martin Sullivan, chief economist at Tax Analysts, said: “It is much easier now for a real estate developer to avoid taxes that it was five years ago.’’
Even before the 2018 law, developers could claim losses more quickly and easily than other businesses — and more easily delay or avoid reporting profits to the Internal Revenue Service. Even if they fall behind on their debts, if their creditors forgive their debts, they face fewer tax penalties than other investors do.
Trump took full advantage of those tax breaks when he was unable to handle his debts on his failing Atlantic City casinos in the 1990s and early 2000s. Even so, experts say it’s unclear whether all his actions were permissible.
“There are a lot of things that Trump has done that may exceed what is allowed by the law,” Wamhoff said.
He noted that the IRS has raised questions about some of Trump’s claims — in particular, a whopping $72.9 million federal tax refund that he sought and received and “business deductions for expenses that really look like personal expenses.’’
The Times reported, for example, that Trump has claimed a 200-acre family retreat in Bedford, New York, as an investment, thereby allowing him to write off property taxes. And he has used what the Times called “unexplained’’ consulting payments to reduce his business taxes. Trump even claimed $70,000 in hair styling expenses during his TV show “The Apprentice.’’
Then again, said Sullivan at Tax Analysts, defining legitimate business expenses is typically a “murky’’ issue.
Hair styling is a clearly a personal matter for an everyday office worker. But for a television personality, it would be a legitimate business expense.