Donald Trump's Awful No Good Week
This week has been, to put it mildly, not a good one for Donald Trump.
On September 27th the inevitable happened - the New York Times revealed that they had received the past 18 years of President Trump’s tax returns from sources unnamed and released the salient info found within them. To be honest I’ve been expecting this drop to happen since the day the Supreme Court decided that while Congress did not have the standing to force the turnover of Trump’s tax returns the Southern District of New York did as part of a criminal investigation into Trump’s business dealings; I knew then that there was no way we would make it to Election Day without knowing the contents of Trump’s tax returns.
Overall - it is a bit of a grab bag of legal but shady activity, some activity that skirts the line between tax avoidance and tax evasion, and possible evasion but further evidence would be needed to make that case.
There are plenty of pieces discussing the nuts and bolts of Trump's tax returns and what they mean from a legal perspective - the full NYT story and this quicker explainer on how some of the revelations from the NYT reporting can present legal problems for Trump - are good places to start. What I’m more interested in is what his tax returns tell us about the shell game Trump has been playing for the past decade; he has been using the money he made off of selling licensing rights to his name to purchase and prop up real estate investments that have been hemorrhaging money.
A bit of a preface before I go forward - I am taking it on faith that the numbers Trump reported to the IRS are true. As of this writing there is no evidence that Trump has either falsified the numbers or that the losses he incurred happened inorganically and, if I’m being honest, I think the numbers are true. We know Trump’s investing strategy is less “does this look good in a portfolio” and more “does this look good in a brochure” but still it’s a bit shocking to see exactly how much money Trump has lost even on his marquee properties. And while it’s true that he can use those losses to lessen his tax burden incurring huge losses on your investments is still a bad business strategy. From the Just Security piece linked above -
“The late, great Martin Ginsburg – a famous tax lawyer and the spouse of the recently deceased Supreme Court Justice Ruth Bader Ginsburg – once jokingly described what he called the ‘Herman tax shelter.’ The idea was that, if you need, say, a $1 million tax deduction, your fictional accountant Herman could say: ‘Give me $1 million, I’ll steal it from you and go to a country where you can’t reach me, and voila, you have a $1 million theft loss.’
The joke was that it isn’t actually beneficial to generate tax deductions by actually losing money. For example, if the tax rate that you face is 37 percent, losing $1 million that is fully deductible generates a tax saving of only $370,000. So you are still $630,000 behind from the loss after tax. For this reason, the key to effective tax shelter planning has always been to generate tax losses that substantially exceed true economic losses (which can happen legally under appropriate circumstances). Trump therefore was not doing himself any good insofar as he actually lost money that he then got to deduct. (And the Times article notes that his tax losses substantially exceeded the amount of his depreciation deductions on business property).”
For me the real story on Trump’s taxes isn’t the legality of his deductions but the proof that the Trump mythos is just that, a myth. It’s a mythos that has earned him hundreds of millions of dollars, money that he burned through to perpetuate the idea that he is a wildly successful real estate investor. It’s a bizarre vicious circle that proves Trump cares more about the image of being wealthy than actually being wealthy; according to his tax returns Trump netted $606M from 2000 - 2019 but only has $4.4M in net profit.
Trump’s tax returns show the lie at the heart of the Trump image - he is, in fact, not a wildly successful and wealthy real estate investor. Given his image is the one thing making him money I can see why Trump would fight tooth and nail to keep those hard numbers from becoming public.
Then we have the first presidential debate, which took place Tuesday September 29th. I have already recorded a podcast episode on my thoughts about that debacle but to sum them up here - it was absolutely ridiculous and Trump should be embarrassed over how he acted. Instead of taking the debate seriously, he brought his Twitter schtick to the stage and it was poorly received. Even members of Trump’s circle were frustrated with his performance and were calling for a demeanor makeover for future debates (more on that in a few). If his behavior hurt him with voters remains to be seen but polling done since the debate shows he certainly did not help his chances.
As if all of that wasn’t enough to make for a miserable week, Trump announced early Friday morning that both he and FLOTUS Melania Trump have tested positive for COVID-19 and will be quarantining for the next two weeks. Obviously, this is horrible timing campaign wise - the next presidential debate is scheduled for October 15th, when Trump will be at the tail end of his quarantine period. Does he skip that debate? Reschedule? Break quarantine and show up in person? Participate in an online debate?
In addition to throwing the debate schedule into question, quarantining means that Trump will have to cancel all in-person campaign events at a crucial time in the election cycle. How does he make up for that lost time? The Trump campaign has not been known for embracing the trend of online events, do they have the ability to scale that up immediately? Will Trump play along with that?
And the biggest question - what if Trump does fall seriously ill? As of now he is mildly symptomatic but it was originally reported that both the president and the First Lady were asymptomatic. This is nothing to laugh about and, in Donald’s case, he is in the highest risk age group and has at least one comorbidity with his weight. What if he has to be hospitalized? Does his diagnosis, even being mildly symptomatic, place doubt in undecided voters’ minds as to if voting for him is a good idea?
For what it’s worth, I don’t think he’s faking having COVID. There is a lot of conspiracy theorizing going around but it remains that this would be a hell of a bad time to fake an illness. I understand the impulse to question this given Trump’s noted history of BS but any perceived upsides to pretending to be ill is outweighed by the real consequences Trump faces from having to come off the campaign trail now.
What does Trump’s awful week mean for the election? I’m not sure we will know that until after Election Day but this is indeed a horrible time to have a horrible week.