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How Donald Trump's personal taxes differ from his constituents

Trump’s taxes, or lack of them


How can self-proclaimed billionnaire Donald Trump justify paying little or no tax for year after year?

30th Sep 2020
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It is a sad comment on contemporary life, but it comes as no surprise to discover that The Leader of the Free World is simultaneously the Leader of the Tax-Free World.

These days, most ordinary citizens will have the impression that many of those at the top of the political heaps in their respective countries have little respect for their own laws or those of wider international standing.

If the media is to be believed, it isn’t difficult to lump the premiers of the United States, the United Kingdom, Russia, Israel and Belarus in a group that allegedly play fast and loose with the laws that the rest of us regard as sacrosanct – that is unless we want to end up in jail.

Even by these standards, it came as something of a shock to discover from an extensive and fascinating New York Times exposé that Donald Trump paid as little as $750 (£580) each in federal income taxes in respect of the year in which he became President of the United States and his first year in office.

By way of contrast, in their first years in office, his predecessors Barack Obama and George W Bush both paid over $100,000 a year, and that is without taking into account subsequent inflationary rises.

Although Boris Johnson bemoans the fact that he cannot live on a prime ministerial salary, even with the use of a small property in Downing Street thrown in, it is hard to believe that he or next door neighbour Rishi Sunak have been avoiding taxes to this extent, though perhaps they might like to open up their tax returns to scrutiny to prove the point.

The good news is that 2016 and 2017 were expensive exceptions. In 10 of the previous 15 years POTUS managed to avoid paying any tax at all.

There are really only three possible explanations.

  1. Despite his claims to the contrary, Donald Trump is a terrible businessman
  2. Trump has the best tax advisers in the world and they are pushing everything to the limit (but possibly not beyond?)
  3. POTUS has been cheating on his taxes for at least a decade and a half.

Unkind journalists have pointed out that many of the first responders – healthcare workers who have been saving lives during the pandemic – were typically paying $10,000 or more in taxes every year.

Some of the New York Times revelations are almost farcical, although they may merely reveal differences between the UK tax system and that in the United States.

You can take your pick from the following.

  • The President claimed $70,000 in tax deductions for his hilarious hairdos. In this case, he might reasonably have been advised to sue the barbers involved instead
  • He uses family members as consultants and pays them substantial tax-deductible sums
  • Most or all of his golf courses, including the masterpieces in Scotland, are heavily loss-making. The same seems to apply to some of his hotel operations
  • You would like to think that HMRC would take the view that these were not operating with a view to profit and refuse to offset losses against other income
  • After one particularly bad spell of loss-making ($1.4bn in two years), he quite possibly invalidly claimed a federal tax refund of $72.9m plus $21.2m in state and local taxes, which is still in dispute with the IRS.
  • A billionaire who boasts about his skills in business seems completely unable to turn a profit – at least for tax purposes.

There may well be more to these stories than meets the eye but, at the very least, it is not difficult to understand why various legal authorities in the United States have been so keen to see and take issue with the tax returns that Trump has been so keen to hide from the public, unlike any of his predecessors in the last half-century or so.

Then again, as Mr Trump has been so eager to point out, perhaps all of this is “fake news”?

Replies (2)

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Head of woman
By Rebecca Cave
01st Oct 2020 15:59

To gain some understanding in how D J Trump manages to avoid payign taxes read this Forbes article by Kelly Phillips:
alongside the New York Times article.

Thanks (1)
By AndyC555
02nd Oct 2020 11:48

"perhaps they might like to open up their tax returns to scrutiny to prove the point."

Boris Johnson did do that during the London Mayor election back in 2012 after a row with Ken Livingstone. Turned out Ken was (quite legally of course) using a company to channel media earnings through and paying dividends to reduce his NIC bill, while Boris was declaring everything as either employment or self-employment income.

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