Trump’s 2005 Tax Forms: ‘Like Going to Dinner And Being Served Pictures of Food’
Economists James Henry and Bill Black hypothesize that there are fraudulent and criminal activities lurking within Trump’s unreleased Tax forms
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
On Tuesday, March 14th, Rachel Maddow of MSNBC dedicated her show to the Trump taxes. As many of you have heard by now, it is the talk of the town in D.C. that journalist David Cay Johnston received the first two pages of President Donald Trump’s 2005 tax return in the mail. According to these returns, Trump earned $153 million in 2005, and paid $38.4 million in taxes, and deducted $103 million from his income because of business losses.
To this, Donald Trump, Jr., that’s Trump’s son, tweeted, “Thank you, Rachel Maddow, for proving to your Trump-hating followers how successful Donald Trump is. And that he paid $40 million in taxes.”
Speaking on Rachel Maddow’s show, David Cay Johnston, who has written extensively about Donald Trump, expressed his suspicion that he might have received the documents directly from Trump himself. Let’s have a look.
RACHEL MADDOW: What I have here is a copy of Donald Trump’s tax returns. We have his federal tax return for one year, for 2005. I believe this is the only set of the president’s federal taxes that reporters have ever gotten a hold of. What we have are these two pages, front and back from the same 1040 Form that you might have filled out when you file your taxes.
DAVID CAY JOHNSTON: And by the way, let me point out, it’s entirely possible that Donald sent this to me. Donald has a long history of leaking material about himself when he thinks it’s in his interests.
SHARMINI PERIES: Joining us to analyze the latest about Trump’s taxes are two of our regular guests here on The Real News Network, and that is Bill Black and James S. Henry. Bill is a professor of law and economics at the University of Missouri Kansas City. He’s also a former financial regulator. He is also the author of the book titled “The Best Way to Rob a Bank is to Own One.” James S. Henry is an economist and investigative journalist whose recent work investigations into Trump financial dealings and particularly his connection with the Russian oligarchs.
Thank you both for joining us, gentlemen.
MAN: You’re quite welcome.
MAN: Thank you.
SHARMINI PERIES: All right, James, let me go to you first. What’s striking to you about these two pages that have been revealed?
JAMES S. HENRY: Well, I think that this is a little bit like going to dinner and being served pictures of food. You have just one year’s tax return and you only have two pages out of what could be several hundred pages. So, it’s very hard to say what this means without having the whole profile. And this just kind of underscores, for me, it underscores the kind of ridiculous situation that we’re in where. We have a president for the first time in, really, history not disclosing all of his tax returns.
That being said, from this one return, there are a couple of standouts of fact. One is that, aside from what’s called the alternative minimum tax, which is designed to make wealthy people pay their fair share, Donald Trump would have only paid about 3.5% federal income tax if it had not been for that provision – which he is trying to repeal.
Secondly, if you look at the composition of his income, nearly half of it comes from partnerships. And partnerships are, a lot of the projects that he’s been involved with that we’ve been tracking, are with dubious partners around the planet. Failed projects like the Trump SoHo, where he was involved with mobsters. A failed project in Panama, where he was involved with President Martinelli’s gang, Martinelli is now being extradited from Miami, if Trump signs up to extradite him. As the former president of Panama, he stole $35 million of lunch money in Panama.
So, there is all these deals that Trump was involved in. These two pages of tax returns just give us one indication of how important those may have been to Donald Trump’s income.
SHARMINI PERIES: Right. Now, I should go to you here, Bill. What’s first most revealing for you about these two? And does it tell us enough about his dealings?
BILL BLACK: Well, it tells us very little about the dealings. This is just the ultra-summarized, two sheets of your tax return. The supporting schedules provide the critical detail. I would point out that the person that was, in essence, the chief operating officer of the Bank of England was just forced to resign in disgrace because of conflicts of interest, where they were not fully disclosed. But obviously, we should have a higher standard – not a lesser standard – for the President of the United States.
With one of the most important reasons why the tradition has developed and has been followed by everyone, except Trump, of disclosing fully the tax returns, is so that we can know about these potential conflicts of interest. In the case of Donald Trump, these aren’t simply potential conflicts, as John Henry has been documenting for months, and David Cay Johnston, and others. These are real live conflicts involving the sleaziest of business practices. Trump University, for example, is simply a front-to-back fraud. Every aspect of it was fraudulent.
We haven’t had presidents before who made their money through a combination of, a.) Inheriting it, and b.) Getting in bed with the sleaziest folks then committing felonies and frauds, and simply immoral transactions. We can’t evaluate those things without full disclosure of all the supporting schedules, and of course that’s the question.
If it is Donald Trump who is actually leaking this stuff, probably we’ll only get the first two pages. If it is someone else who was outraged at Donald Trump’s abuses, well, then we very well may get disclosed in the future the supporting schedules. And in that case Trump would be in a world of hurt.
SHARMINI PERIES: Right. James, let me go to you. According to these documents, almost 50% of Trump’s income comes from partnerships. Yet we don’t know who these partners are and where this money is coming from. What does your investigation so far has uncovered about his partnerships?
JAMES S. HENRY: Well, he’s done a lot of deals with very dodgy people in projects that openly – sometimes even a very short time of when they were conceived – went belly-up. The Ocean Club in Panama – a great example – a $400 million facility went bankrupt after three years. It had a lot of Russian organized crime types selling condos. Trump took out at least $50 million from that project even though it failed. Similar projects; the Trump SoHo in New York, a failure, and a Trump project in Rio, a failure, the bankruptcy in Toronto, a failure.
These are all deals in which Trump was allowed to get essentially licensing royalties, or in some cases equity in the partnership in exchange for the use of his brand. And, you know, we’re just beginning to understand how much these partnerships may have been filled with all kinds of money-laundering activities.
So that’s one thing that we would like to know more about. I think the other things, though, most Americans will look at this and say, “Hey, President Trump paid $38 million in taxes. What’s the problem?” Well, the problem is that when you look at why he paid taxes, it was only because of his alternative minimum tax that he’s trying to repeal. And I think the other thing about this is, yes, he’s a wealthy guy, he’s making lots of money. But he’s nowhere near a $10 billion net worth individual.
If you capitalize these incomes, it’s more consistent with maybe a billion, a billion and a half, at most. And that presumes that this one year snapshot is reflective of the other years. We don’t know.
SHARMINI PERIES: Right. Bill, one of the interesting things about this release is that Johnston himself points this out, and that is that Trump paid about 25% of his income only because of the existence of the alternative minimum tax. If it weren’t there, Trump may have not have paid these taxes at all.
Now, Trump is looking to abolish this particular tax provision. What do you make of that?
BILL BLACK: This goes to a broader philosophical view of the nation. And Trump is the opposite of “Ask not what the country can do for you. Ask what you can do for the country”.
During the campaign, he said the fact that he paid zero taxes in a number of years proved that he was smart. In his press release, in response to the disclosure of the tax return that we’re talking about, he said that it his duty to pay the absolute smallest tax possible.
Well, you know, if that’s true, then you can do all kinds of dodgy things with accounting to create phony losses and to hide real income. And if you think that that’s your duty, and that smart people cheat on their taxes, and only dumb people, as in the famous phrase, “Only little people pay their taxes, the rich don’t”, well then pretty quickly you end up in an Argentina, or Italy, or Greece situation, where the wealthy pay virtually no taxes. The result is that the public sector breaks down and ultimately the nation breaks down.
The United States has a different philosophy. That no, no, no, that is not appropriate. And therefore, we’re going to adopt alternative tax.
This isn’t just mechanics, this is philosophy. It is said, we’re not going to allow the rich with the super tax lawyers, and the dodgy accountants, and these scummy partners, to game the system so that they pay no taxes and support virtually nothing in this nation that they’re gaining so much from. Right? We’re going to ensure that, at a minimum, they pay about what a high upper-middle income person would pay, as a tax break. Trump wants to get rid of that, and the Republican Party is fully behind this. They want to get rid of the alternative – and they don’t want to reduce it. They want to eliminate the alternative tax.
And as John Henry just explained, that would have reduced Trump’s taxes to under 3%. So, I don’t know what that would be normally, but perhaps, say, someone making $25,000 a year.
SHARMINI PERIES: James, you have something to say about this, as well.
JAMES S. HENRY: You know, if you have the rich able to use all of these mechanisms to get, in this particular return, Trump was able to deduct $103 million of accelerated depreciation losses against his $150 million income – virtually wiping out a lot of his tax liability – plus $17 million of itemized deductions for things that we don’t know what they were.
And, if you proceed down this path, we’re going to end with a system that they have in Brazil where the top 10% of the population pays a lower share of the cost of government than the bottom half of the population. And you shift to sales taxes, and excise taxes, and payroll taxes, which are really regressive. That’s not the kind of society that we want to have. That’s an oligocracy.
SHARMINI PERIES: Right. And, Bill, let me point the last question to you. The White House released a statement on Tuesday in which, in effect, it confirmed the authenticity of the tax forms. And it also said that publishing them is illegal. Maddow and Johnston both denied such accusations of illegality of it all. What are your thoughts?
BILL BLACK: No, it’s not illegal. And Trump also tweeted that this was, you know, who would believe that an investigative journalist that no one had ever heard of would actually get information from whistleblowers? Well, first, David Cay Johnston is a Pulitzer Prize winner, a long-time top New York Times person on taxes. And second, hey, whistleblowers do exist in America. And one of the reasons America hasn’t gone the route of Brazil and other very, very corrupt places, is whistleblowers and independent journalism.
So, you can bet Donald Trump, a.) Wants to get rid of the alternative minimum tax so he can get away with everything, and, b.), he would love to criminalize anybody blowing the whistle on his abuses and even his outright frauds.
SHARMINI PERIES: James, you have something to add to that?
JAMES S. HENRY: I think the question has to be put back in Trump’s face, which is what are you hiding? Why can’t you share your tax information with the American people like every other president has done?
SHARMINI PERIES: All right. With that, we’ll look forward to the revelation of the budget coming up. And I thank you both for joining us today.
JAMES S. HENRY: You’re quite welcome.
BILL BLACK: Thank you.
SHARMINI PERIES: And thank you for joining us here on The Real News Network.