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Auditing Trump

Donald Trump is refusing to release his tax returns. He claims that it is because he is being audited by the IRS, but that argument doesn’t hold a drop of water. First of all, Trump has plenty of older tax returns that are not being audited, and he refuses to release those too. And second, there is nothing wrong with releasing a tax return while it is under audit. In fact, Richard Nixon did so in 1973.

Donald Trump is the first major presidential candidate to not release his tax returns in 40 years. Given that Trump is not shy and talks about his private life all the time, it is obvious that his tax returns must contain a bombshell of epic proportions.

Electoral vote speculates on some of the possibilities:

  • He’s paying a very low effective tax rate
  • He’s using trickery of various sorts to (legally) game the tax system
  • He’s not as wealthy as he claims to be
  • He’s not giving much (or anything) to charity
  • He’s been giving money to Democratic candidates

Unless proven otherwise, we can only assume that all of these are true. In fact, an editor of Bloomberg News has seen Trump’s tax returns, and while he legally cannot reveal what he saw, he strongly hints that there are multiple bombshells in them. At the very least, we already know that Trump routinely lies about how wealthy he is.

UPDATE: For several years, Trump has been receiving a deduction from New York State that is only available to people who make $500,000 or less. So, does this mean that Trump is cheating on his taxes, or does he really make that little, given that he claims to be “really rich”? What’s really ironic is that the tax break was worth a measly $302, and he had to apply for it.



  1. Jonah wrote:

    Friday, May 13, 2016 at 2:47 am | Permalink
  2. Iron Knee wrote:

    Thanks Jonah. I incorporated that link into the post. Awesome.

    Friday, May 13, 2016 at 4:30 am | Permalink
  3. ebdoug wrote:

    My guess is that he has a net operating loss (NOL)carry over from his bankruptcies that causes him to pay little or no taxes, meanwhile he cheated his contractors out of their money when he declared bankruptcy.

    Political contributions are not deductible so the last “gives to the Democrats” is just a joke.

    Friday, May 13, 2016 at 5:23 am | Permalink
  4. ThatGuy wrote:

    Won’t matter to his backers. His troglodyte supporters will simply assume he’s somehow sticking it to the IRS.

    Friday, May 13, 2016 at 6:47 am | Permalink
  5. Jonah wrote:

    You’re welcome. Keep in mind though that o’brien saw trumps return about 10 years ago. They may be different now. However I agree that for his die hard fans who mostly care about immigration and sticking it to the foreigners, the lack of public tax returns is likely a trivial issue. Luckily die hard trump fans are a small minority. As long as independents and “feel the bern” democrats who hate Hillary are troubled by the lack of transparency, thats all that matters.

    Friday, May 13, 2016 at 8:31 am | Permalink
  6. Jonah wrote:

    Thin skinned hedge funders like Cooperman and Scarramucci will be voting trump.

    Friday, May 13, 2016 at 8:41 am | Permalink
  7. redjon wrote:

    Maybe Trump knows that his tax returns will make people yawn.

    The last thing Trump needs, after all, is for anybody to yawn about anything associated with him.

    Friday, May 13, 2016 at 1:17 pm | Permalink
  8. jonah wrote:

    The 4th para sums up how trumps ardent supporterts view him

    Donald Trump would slash taxes by trillions of dollars, leave entitlements alone, boost spending on infrastructure and defense, and, claims an advisor, deliver a budget surplus of $4.5 trillion to $7 trillion.

    There is no credible way to reconcile these claims. Mr. Trump’s proposals will, if enacted, dramatically raise the debt, not decrease it, much less produce a surplus.

    Politically, though, it doesn’t appear to matter. As Mr. Trump understands well, voters care a lot less than wonks and journalists do about policy details. Mr. Trump and Bernie Sanders, Hillary Clinton’s competitor for the Democratic nomination, are riding high not because of their policies but because they aren’t the establishment.

    This affords both men extraordinary freedom to make more extravagant promises than their more arithmetically deferential rivals. It also enables Mr. Trump to change those positions at will to neutralize his rivals’ lines of attack. In others, this would be called flip-flopping or prevarication. To Mr. Trump’s supporters, it’s candor. “He talks before he thinks,” one supporter said, “so he doesn’t have time to think up something and lie to you.”

    Mr. Trump’s malleable philosophy contrasts starkly with that of House Speaker Paul Ryan. As my column this week notes, Mr. Ryan has since 2008 crafted a consistent, conservative vision of governance centered around lower tax rates, less generous entitlements and less debt.

    Two groups of readers criticized the column. The first said Mr. Trump deserved more credit for caring about debt — he did, after all, promise to pay it off in eight years. The second said it gave Republicans too much credit since they’ve regularly run up the red ink when they held the White House.

    On this latter point, that was true of the old GOP. Starting in the 1970s, some Republicans claimed lower tax rates would generate so much growth, the resulting revenue would pay for the tax cuts. Whether they actually believed this was less relevant than the fact it was easier to sell politically than “root-canal” spending cuts.

    In the end tax cuts didn’t pay for themselves and most Republicans stopped claiming they did, until Mr. Trump came along (more on this below). Their devotion to tax cuts endured, though, often paired with vague promises to trim spending. In fact, George W. Bush cut taxes and boosted spending, in particular on two wars and a new entitlement (the Medicare drug plan).

    Mr. Ryan’s ascent signaled a Republican revolt against both the big government liberalism of Barack Obama and big government conservatism of Mr. Bush. Mr. Ryan was passionate that uncontrolled entitlement spending would lead the U.S. to a Greek-style crisis. He laid out plans to get the debt down by slowing the growth of entitlements, including Social Security, Medicare and Medicaid. He opposed several debt deals because they didn’t attack entitlements enough and raised taxes. He also sought to make conservatism inclusive, for example by courting immigrants. He apologized for once labeling Americans who accept government benefits as takers rather than makers: “Most people don’t want to be dependent. And to label a whole group of Americans that way was wrong.”

    Mr. Trump broke with Mr. Ryan on both style and substance. He made inflammatory remarks about illegal immigrants and Muslims. He rejected Mr. Ryan’s stance on entitlements as political suicide. Yet he stuck with Republican orthodoxy on taxes, offering a plan that cut them by more than any rival. The Tax Foundation, a think tank that favors lower taxes, said it would cost $10 trillion over a decade even after assuming higher economic growth and tax revenue.

    Rather than accept that, Mr. Trump brazenly promised to pay off the debt in eight years. He has now out-supply sided the original supply-siders with a tax-cut-centered program that his campaign claims more than pays for itself. Sam Clovis, his policy director, told a conference Wednesday that Mr. Trump’s plans would generate a $4.5 trillion to $7 trillion surplus. He claimed they would generate $7 trillion in new revenue by raising growth from its 1.4% average of the last decade by two percentage points

    Mr. Clovis’ analysis is riddled with holes. The Congressional Budget Office projects $9 trillion in deficits over the coming decade. Adding Mr. Trump’s tax cut would make that $19 trillion. Even if it generated $7 trillion in new revenues, that doesn’t turn a $19 trillion deficit into a $7 trillion surplus.

    And it’s not going to generate $7 trillion in new revenue. The Tax Foundation already assumes Mr. Trump’s plan lifts growth by about one percentage point per year over a decade (without that, the cost would be $12 trillion). And that’s optimistic; the Tax Foundation is more bullish on the effects of lower taxes than most economists. Unlike the CBO, it doesn’t think all that borrowing will drive up interest rates and depress investment.

    Mr. Clovis notes the economy grew around 4% per year after the Kennedy tax cut in 1964 (enacted by Lyndon B. Johnson) and Ronald Reagan’s tax cut in 1981. But the country was younger and its labor force growing faster then, so 4% growth was easier to achieve. Even so, the 1960s growth spurt drove up inflation and led to stagflation in the 1970s. The 1980s boom was driven primarily by the recovery from the early 1980s recessions. Between 1982 and 1989, unemployment fell from 9.7% to 5.3%. That can’t be repeated today when unemployment is already 5%. In any case, the deficit in 1989 was larger as a share of GDP than in 1981.

    Mr. Clovis says Mr. Trump will propose “other factors” to reach the surplus. What those factors might be is unknown. Meanwhile, other elements of Mr. Trump’s platform would hurt, not help, growth, such as deporting 11 million illegal immigrants, which would shrink the labor force by 6% (and cost up to $619 billion).

    All politicians make conflicting promises on the campaign trail. The question is, once in office, which prevails? Mr. Trump is a populist, not a movement conservative. His instinct will be to give his political base what it wants, not what conservative wonks prescribe. That means lower taxes and no change to entitlements.

    And if that drives up debt? If it doesn’t bother voters, it probably won’t bother him.

    Saturday, May 14, 2016 at 2:45 am | Permalink