Trump’s taxes may reveal criminal, Constitutional violations

Journalists spent the holidays combing through 6,000 pages of Trump’s 2015-2020 tax records. Here’s what they found, and why it could create more legal trouble for Trump.

For years, former President Trump refused to honor a decades-old precedent, which began with Richard Nixon, by publicly releasing his taxes as a presidential candidate. Throughout his four years in office, he continued to refuse to release his yearly taxes as the 8 Presidents before him had done. Now we may know why.

Last week, the House Ways and Means Committee, who had obtained Trump’s tax returns going back to 2015 after a protracted legal battle, released nearly 6,000 pages of documents. Since then, journalists have been sifting through the huge document dump. Some important nuggets were released just before New Year’s. But with all the hustle and bustle of the holiday, they didn’t make much of a splash. Now that the confetti has settled, here are a few aspects of Trump’s tax records that are worthy of further attention, and possibly even legal scrutiny.

Foreign accounts and holdings

Some readers may have heard a vague mention of these over the weekend. Trump held bank accounts in China between 2015 and 2017. He also had accounts in Ireland, the UK and St. Martin during his presidency.

During his candidacy and presidency, Trump’s taxes cited business income, expenses, taxes or other significant financial items from various countries and territories: Azerbaijan, Brazil, Canada, China, Dominican Republic, Georgia, Grenada, India, Indonesia, Ireland, Israel, Mexico, Panama, Philippines, Puerto Rico (US territory), Qatar, South Korea, Saint Martin, Saint Vincent, Turkey, United Arab Emirates and United Kingdom.

How big a deal is it really?

It depends on how you read the Foreign Emoluments Clause (Article I, Section 9, Clause 8) of the United States Constitution.

“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.“

“Emolument” is just a fancy word for salary or compensation for an office or service. The Foreign Emoluments Clause exists to ensure that the President and other federal office holders are not financially beholden to any foreign power. When Trump took office in 2017, he again defied decades of precedent for sitting presidents. Rather than selling assets or putting them in a blind trust as previous Presidents had done, Trump left them in the control of his children, many of whom also had prominent roles in his campaign and administration. Simply put, this opened the door to corruption.

Trump and the Saudis

The foreign accounts and holdings were not Trump’s only flirtation with violating the Clause. During Trump’s presidency, Saudi Arabia spent hundreds of thousands of dollars at Trump hotels in Washington and elsewhere. And lo and behold, Trump signed a massive weapons deal with the Saudis. He also vetoed a bill passed by Congress to stop supplying weapons to the Saudis on the grounds they were being used to perpetrate war crimes in Yemen, the Kingdom’s impoverished neighbor. When US intelligence concluded that the Saudi Arabian Crown Prince likely ordered the brutal murder of journalist Jamal Khashoggi, Trump dismissed and downplayed the allegation, and bragged about it.

Trump’s cozy financial relationship with the Saudis didn’t end after he left office. It continues even now that he’s officially announced his 2024 presidential candidacy. Early in 2021, Saudi Arabia signed a $2 billion investment deal with Trump’s son-in-law Jared Kushner. More recently, Trump’s golf course in Miami became part of the Saudi-backed LIV Golf circuit. The amount Trump has received for this hasn’t been disclosed. Considering that LIV pays top players hundreds of millions of dollars, a fee in the tens or hundreds of millions for the use of Trump’s club doesn’t seem out of the question.

Trump’s financial relationship with the Saudis is far from the only concern. His holdings in China, revealed both in the returns and in previous reporting, have also drawn considerable scrutiny. There’s also his recent $4 billion deal to open a golf resort Oman, another wealthy kingdom on the Arabian Peninsula with an abysmal human rights record. But there’s another elephant in the room that needs addressing.

Evidence of “criminal tax evasion”

Trump’s tax records show that he paid $641,931 in taxes in 2015; $750 in both 2016 and 2017; just under $1 million in 2018; $133,445 in 2019; and in 2020, he paid nothing.

Columnist David Kay Johnston of the Daily Beast says Trump’s tax documents suggest “powerful evidence of criminal tax evasion” which merit scrutiny from investigators. Johnston firstly highlights how Trump managed to turn a $2.8 million profit off the Alternative Minimum Tax between 2015 and 2020. This is not illegal in and of itself. It’s merely an example of how lobbying by the wealthy (including Trump himself) has helped to structure our tax codes in their favor.

However, Johnston also points to a bigger, and potentially criminal, red flag. This concerns 26 sole-proprietor (Schedule C) Trump businesses “with zero revenue and hundreds of thousands of dollars in tax deductions for expenses”.

“Unless Trump can produce records showing the expenses are real and meet other standards to be deductible, that’s fraud,” Johnston says.

These 26 deduction claims, Johnston adds, should be of particular interest to New York State Attorney General Letitia James, or Manhattan District Attorney Alvin Bragg. Both James and Bragg are probing the finances of Trump and his businesses for criminal violations.

A Manhattan jury recently found the Trump Organization guilty on 17 counts of criminal tax violations. Meanwhile, AG James announced last year that she was suing Trump for flagrant tax violations and bank fraud. Johnston says a probe into the validity, or even existence, of these 26 sole proprietorships could yield a “slam-dunk prosecution”. James and Bragg so far haven’t commented on any of the recent revelations from Trump’s tax forms.

This all leads to an important question.

Why wasn’t any of this caught before?

Johnston’s article explains in depth the various incentives and disincentives for the IRS when it comes to auditing the wealthy. The IRS’ own incentive structure has created an environment that allows wealthy individuals and businesses to risk violating an already favorable tax code without fear of prosecution.

During Trump’s presidency, any of these red flags coming to light would have resulted in impeachable offenses. And, as President, Trump should have undergone mandatory IRS audits each year he was in office. So what happened there? The short answer is- practically nothing.

The IRS only undertook a very limited look at Trump’s 2016 filings- and that only happened in 2019! None of the other years received any official scrutiny at all.

There are various explanations as to why. Johnston blames the loyalists Trump appointed to key positions, namely IRS commissioner Charles Rettig, and Rettig’s boss, Treasury Secretary Steve Mnuchin. But the House Ways and Means Committee’s findings point to something less nefarious but equally troubling.

No cop on the beat

The IRS simply doesn’t have the resources to take on audits of highly-complex filings by wealthy individuals and entities. This, of course, means that the burden of tax enforcement disproportionately falls on middle- and working-class taxpayers

While Trump was in office, agents responsible for auditing him never brought in specialists to scrutinize his filings and holdings. They justified this inaction with an assumption that a private accounting firm (hired by Trump) would make sure everything was in order. In the Committee’s opinion, that “assumption” was a grievous error.

Coincidentally, House Republicans have announced it will be their first order of business to roll back one key provision of Biden’s Inflation Reduction Act – the provision that would beef up IRS funding and enforcement to crack down on wealthy tax dodgers.

Trump’s taxes may reveal criminal, Constitutional violations – National & International News – TUE 3Jan2023