The Daily - The President’s Taxes

Episode Date: September 29, 2020

Russ Buettner and Susanne Craig, investigative reporters for The Times, have pored over two decades and thousands of pages of documents on Donald J. Trump’s tax information, up to and including his time in the White House.What they found was an existential threat to the image he has constructed about his wealth and lifestyle. The tax documents consistently appeared to call into question the business acumen he has cited in his presidential campaign and throughout his public life.The records suggest that whenever Mr. Trump was closely involved in the creation and running of a business, it was more likely to fail. They show no payments of federal income taxes in 11 of 18 years that The Times examined, and reveal a decade-long audit by the Internal Revenue Service that questions the legitimacy of a $72.9 million tax refund. They also point to a reckoning on the horizon: The president appears to be personally on the hook for loans totaling $421 million, most of which is coming due within four years.We speak to Russ and Susanne about their findings and chart President Trump’s financial situation.Guest: Russ Buettner and Susanne Craig, investigative reporters for The New York Times.For more information on today’s episode, visit nytimes.com/thedaily Background reading: Long-concealed records on Mr. Trump’s tax information reveal struggling properties, vast write-offs, an audit battle and hundreds of millions in debt coming due.Here are some of the key findings from the previously hidden tax information.While the president’s Republican allies have mostly remained silent on the situation, Democrats have pounced.

Previously on The Daily. I stopped at my mailbox. There was three pages of Donald Trump's tax returns from 1995. And we started acquiring these documents, previously unseen documents. We were able to unearth the tales about Donald Trump's wealth that he has worked very hard for a very long time to keep hidden. Over the past four years, the Times has conducted two major investigations into President Trump's finances. He inherited hundreds of millions of dollars from his father

and much of it was gotten through fraudulent means. The first was an examination of tax returns for the president's father, Fred Trump. Just imagine how much more we could learn if we could just get our hands on his tax returns. The second. We now have the most complete tax information that's really ever been seen outside of Donald Trump's inner circle and his tax preparers. Examined Donald Trump's taxes from 1985 to 1995. So now what we can see from this entire period of time is that his core businesses lost $1.2 billion. Revealing enormous financial losses.

It is a staggering amount of money to lose over the course of a decade. We never see that he actually gets profitable. The losses just keep getting worse and worse and worse. But the missing piece has always been his current financial records. You know, we have spent so much time looking at Trump's finances, and we know a lot up until 1995, but it really becomes a bit of a black hole beyond that. Today, we speak to reporters Sue Craig and Russ Buechner about the latest installment of their investigation.

It's Tuesday, September 29th. Tuesday, September 29th. Russ and Sue, the last time that we spoke, you had obtained a decade of tax return data for Donald Trump up through 1995, never before disclosed to the public. So what information have you both, along with our colleague Mike McIntyre, obtained now? What we've obtained now is 20 years of income tax data on Donald Trump covering 500 business entities, 5,000 business tax returns, his individual tax returns. Arguably the most important finances because they were, you know, the lead up to when he ran for president. And now we have thousands of tax returns, personal and corporate, that include two years of his time in the White House.

Hmm. So these are the documents, to put it simply. I mean, the tax information that the president has steadfastly refused to share with the public since the start of his first campaign for president and throughout his entire first term. And in fact, has sued to block the disclosure of in cases that have gone all the way up

to the Supreme Court. So this is a very significant reporting development. Yeah. Well, I want to unpack that in the context of what was previously known about Donald Trump's financial history. So picking up where we left off from your last big investigation, what do these new documents help you see about the next chapter of the president's finances post-1995? What we can see in these that we couldn't see before is that after 1995, he was still recovering

from that billion dollars in losses that he accumulated. He was trying to reinvent himself, branching new things, but it wasn't really taking hold. His casinos were failing again. He was going to have to come up with $55 million just to keep his hand on the casinos. Everything was kind of flat. And all of a sudden, he has this new financial lifeline. Welcome to the New York Stock Exchange, center of the world. Now, you're going to go outside and you're going to sell lemonade.

The Apprentice. Hey, look, you claim to be like me. The difference is I work hard. You've been lazy. You've been nothing but trouble. You're fired. And it gives him this incredible windfall of money. Trump's stakes are the world's greatest stakes,

and I mean that in every sense of the word. These whole new revenue streams, not just from the show, but also eventually from licensing deals and endorsements. The Sharper Image is one of my favorite stores with fantastic products of all kinds. Just starts putting his name on anything. Every great suit needs a great shirt and tie. My dress shirts are 100% cotton. Gentlemen, Oreo has rejected my bid to buy the DSRL, so we lick race for it right here with double stuffed gold.

For double stuffed Oreos. So what do you think of my Trump home mattress collection by certain? And mattresses and vodka and even water. It arguably is probably the most money he's ever made. Eventually that wealth stream, just the money from his fame that requires no business expertise totals $427 million. We've now looked at almost 30 or 40 years of Donald Trump's tax returns and his financial records. We've analyzed his inheritance. And I have to say from that whole arc of it, this wellspring that came from the apprentice, that's an amount of income unlike anything he experienced in any other aspect of his life. And what we can see in these documents, just like what we saw with the inheritance that Donald Trump got from his father, is once again, he lost this big windfall. And how do you lose $400 million?

Well, one way to do it is to underperform in businesses, to buy businesses that don't cover their expenses month after month, year after year. And Donald Trump, during this period of time, begins expanding very rapidly into golf courses. businesses, to buy businesses that don't cover their expenses month after month, year after year. And Donald Trump, during this period of time, begins expanding very rapidly into golf courses. In some years, he buys three golf courses at one time. He picks up Doral, an iconic golf course in Florida. He buys three golf courses in Ireland and Scotland and invests more money in those courses. And they keep losing even more money after that. And you can see how that starts whittling away. He's literally having to prop those businesses up with the money he's making from the apprentice and the licensing deals. So by 2015, we can see in the documents that we have that his finances are coming under some stress.

He's really started to burn through the cash that he's getting through theice. It's coming in and it's going back into the golf courses. And over those years, you see on those tax returns, these new documents, that his revenue, his easy money from being on television and the licensing deals is dropping off the face of the earth. And he doesn't have enough anymore to support the businesses that he's bought. So it sounds like a big thing you're learning in this period is that when it comes to the kinds of deals in which somebody else borrows the Trump name and uses it, Donald Trump is swimming in money. But when it comes to a business that he buys and tries to operate, like a big golf course, that those become big financial black holes. One inescapable truth when you really analyze these documents is that the less decision-making authority Donald Trump has on a business, the more money that business is going to make.

And the more he's involved in designing a business and setting it up and creating a business plan, the more likely it is to have trouble. And so he finds himself in 2015, really, again, for like the second or third time in his life, needing a complete reinvention. He needs more licensing deals. He needs more name recognition. And what does he decide to do?

Ladies and gentlemen, the Republican nominee for president, Donald J. Trump, and the Democratic nominee for President Hillary Clinton. The next thing he does is run for president. I have a great company. I have a tremendous income. So it's really interesting to look back at that campaign. And the reason I say that is not in a braggadocious way. It's because it's about time that this country had somebody running it that has an idea about money.

He ran for president on being a billionaire. That year, he presents himself as this incredible businessman who makes fantastic deals. I just looked today. The income is filed at $694 million for this past year. $694 million. And we now can look back and see that that point in time was a real inflection point for him. If you would have told me I was going to make that 15 or 20 years ago, I would have been very surprised. But that's the kind of thinking that our country needs. Russ and Sue, if we go back to the 2016 campaign season, questions about Donald Trump's taxes were very much mounting at that time,

as were demands for him to release his taxes. Mr. Trump, we're talking about the burden that Americans have to pay, yet you have not released your tax returns. Don't Americans have a right to know if there are any conflicts of interest? And one of the reasons why he said he could not release them at that time. I pay hundreds of millions of dollars in taxes, but, but as soon as my routine audit's finished, I'll release my returns. I'll be very proud to.

Was because he said he was being audited. And that was always seen as a red herring. There's nothing in being audited that prevents you from releasing your tax returns. It was just a choice he made. But what we can see from these new records that we've obtained is that he, in fact, was under audit. And it went all the way back to 2008 and 2009 when he declared his core businesses had a built-up loss over the years of $1.4 billion that he declared all at once. Wow. So another billion-dollar loss. You had

previously told us about one in the 90s, and this one comes despite the fact that he has been experiencing this financial bonanza around The Apprentice. Yeah, they're really some of the best years of his life. But he does that, and he uses that, those built-up losses, to declare a tax refund on every dime of taxes he had paid in 2005, 6, and 7, the really peak years of his Apprentice money. And he gets all of that money back in a pretty short period of time, checks totaling $70 million plus $2.7 million in interest. And what would have been the rationale for ever claiming a $70 million refund on a billion plus dollar set of financial losses? It's one of the magical things about certain kinds of business ownership that you can use your failure in one year to kind of average out over a period of years.

Usually you can only go back two years. But at that point in time, President Obama had signed this law that allowed business owners who were really struggling in the Great Recession to claim refunds back for five years of income taxes. There was probably no one in the country who benefited more from that law than Donald Trump. Given the course of their relationship and their actions, it's really ironic that something President Obama did to help business people benefited Donald Trump on such an incredible level. And just to be clear, that $1.4 billion loss, that's real. He really did lose that amount of money in this flush period? He had lost that amount of money over some number of years. It's not clear from the records we have how many number of years, but they were all kind of built up and he declared them all at once at a very opportunistic time.

Yeah. And there's questions around, you know, the legitimacy of the claim of that refund. And now you imagine we've got Donald Trump when he entered the White House in January 2017, was actively fighting the U.S. government over this refund. And it's still going on today. I mean, when he talked about the audit initially, you know, before I had seen the tax documents and had gotten into them, you sort of think, oh, yeah, he's under audit, like kind of, you know, most business people would be. But this is a really contentious audit. They've been waging it for 10 plus years. So this is very new information to me. And this is definitely not something the president ever says when he mentions the audit, which he mentions all the time. And you're saying the IRS and this audit is all about whether or not Donald Trump

should have ever gotten a $70 million check from the U.S. Treasury as a result of all of these financial losses. Yeah, you know, he got a check that he probably cashed and has spent. And now 10 years plus on, he is still waging this battle with the IRS over the legitimacy of the refund. of the refund. If he has to pay it back, he's going to have to pay that amount back plus the refunds he got, you know, at the state level as well as interest and potentially penalties. And you think about that, that could total over $100 million. We'll be right back. were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license. And they showed he didn't pay any federal income tax. So that makes me smart. Zero. That means zero for troops.

Zero. So Sue and Russ, the story you just told would seem to bring us back once again to how the president talks publicly about his taxes. And what the president has said going back to this period in 2016 is, look, I'm a savvy navigator of the tax code. I find ways to pay as little as possible. And I specifically remember a debate, a presidential debate between Donald Trump and Hillary Clinton when he said this in 2016 after being asked about one of your first big investigations, Russ and Sue. The New York Times published three pages of your 1995 tax returns. They show you claimed a $916 million loss, which means you could have avoided paying personal federal income taxes for years.

You've said you pay state taxes, employee taxes, real estate taxes, property taxes. You have not answered, though, a simple question. Did you use that $916 million loss to avoid paying personal federal income taxes for you? Of course I do. Of course I do. And so do all of her donors, or most of her donors. I know many of her donors. Her donors took massive tax write-offs. So have you not paid personal federal income taxes?

A lot of my write-off was depreciation and other things that Hillary, as a senator, allowed. And she'll always allow it, because the people that give her all this money, they want it. That's why. See, I understand the tax code better than anybody that's ever run for president. Hillary Clinton— And so is that what you have found methods and kind of cracking the tax code. No. And we can get really specific on this now because we've done this analysis of his returns and just sort of sitting with them for the amount of time that we did.

We can see that he's losing so much money, you know, coming up to 2016 for the previous 15 years. In 10 of those, he paid absolutely no income tax. Zero. Zero. And it was really startling to see because you do think, you know, rich people have great accountants and they're able to do all this wizardry to get a tax bill down. And we do see evidence that he's employed accounting maneuvers that have helped him do that. But this is not a case of a rich guy hiding profits. This is a case of a man who runs businesses that year after year lose tens of millions of dollars. So basically, there's just not enough money at the end of the year when you tally up all the pluses and the minuses. The minuses so outweigh the pluses that there's just nothing

or very little to tax. There's no question the reason that he's paying no taxes in most years is because he's losing much more money than he's taking in. It feels like it's not the story many people had really expected. Perhaps they had expected that if the president's tax records were ever disclosed, they would show that, yeah, maybe he hadn't paid a ton of money because he was very good, as he said, at taxes. But the story you're telling here and the story it sounds these documents are revealing is that Donald Trump paying little, if any, taxes is really the story of a businessman who has mismanaged his businesses and racked up enormous losses, who takes profits and turns them into losses at such a vast scale

that there's just basically nothing left to tax at the end of a year. That's exactly right, Michael. And then what we see in these documents, the year that he's running for office, calling himself the best businessman ever, he pays only $750 in federal income tax. And in 2017, the next year, his first year in the White House, again, he pays only $750. So a self-described billionaire in the first year as president pays the United States Treasury less than $1,000 on all of the money that he has made. That's right, $750. made. That's right. $750. I mean, you've probably paid more in income tax this month than he paid all year in 2016 and 2017. And how does that very small number, $750 a year, how does that compare

to other wealthy Americans? I mean, there've been lots of stories and reporting about, you know, for example, how little tax a company like Amazon or Apple pays. Of course, that's a company, not a person. So how should we think about the way that wealthy Americans, the people who run those companies, end up paying taxes in comparison to the president? It doesn't compare at all. Paying $750 would not put you in the ranks of millionaires in America. What we hear from those companies are that the corporation didn't pay taxes, not that the CEO didn't pay taxes. What the research on that, Michael, shows is that the top 1% of taxpayers who pay the lion's share of taxes

pay about 26% roughly of their taxable income. But that's a hard equation to apply for Donald Trump because his taxable income is a negative number every hard equation to apply for Donald Trump because his taxable income is a negative number every year. Okay, so given everything you have said, what do we know about President Trump's financial situation as of right now? So what we can see right now is the president is in the grips of a tightening financial vice. He has several hundred million dollars in debts coming due within four years that he has personally guaranteed. That's a secret he's kept from the world. He's on the hook for that money. Some of the businesses that owe that debt are not performing well. It's going

to be hard to refinance that money. He also has just a dwindling access to cash to fill the holes that has been available to him in previous years. His licensing money has almost dried up. The apprentices ended. He had a lot of other deals that kind of just petered out at the end of that. And so without a source of cash to pay off those debts and to continue to fill the holes that he has in his business at an ongoing level, he faces possibly a day of reckoning coming in the not too distant future. And Russ, how much money are we talking about here? How much is he on the hook for personally? Personally on the hook for $420 million.

Wow. About $300 million of that is debt that comes due within the next four years. That's a pretty staggering fact that the sitting president of the United States owes hundreds of millions of dollars. Yeah. And it's a testimony too, to how underperforming his businesses are. If those were loans on real estate buildings, on commercial office buildings that were performing well, kicking off profits and appreciating, refinancing that debt would be a piece of cake. off profits and appreciating, refinancing that debt would be a piece of cake. But it's a loan on the old post office hotel, which he's having to inject about $5 million a year to keep afloat. It's a loan on Doral, which he's also having to support with increasing cash injections.

So a bank might come in and look at that and say, these businesses can't pay the loans that you have due on them. We're not going to refinance and give you more. And that could place him in a real pinch. And that could be part of the reason why he had to personally guarantee those loans, because the banks looked at them and said, there's just not enough business there to warrant this cash without something else behind it. And if these debts are coming due within four years, and he were to win re-election, this would be playing out for him as a second term president, right? This major cash crunch. Yeah. And he's going to be having to go to some of the largest financial institutions in the country and ask them to refinance these loans. They may not. That may force him to have to go to other lenders to get different terms, or he may have to start selling

assets. But either way, just think about that. A sitting president who's going to be maybe having to visit banks to try to negotiate the terms of a loan. He's maybe going to have to find a buyer. You're going to have to wonder, is the buyer there because they really see value in the golf course or the hotel, or because he's a sitting president. And all of that just presents a really thorny set of situations. So what these tax documents clearly show is that right at this moment, the president of the United States is in a very big financial bind, even as he's trying to run the country and as he asks that country to re-elect him in, I guess, 30 days. Yeah, it's a pretty unique situation historically to have a president who is a businessman, has chosen not to divest from his businesses.

So his fortunes as a businessman are still very much tied to his time in office. That's a very unique thing. And this audit is bearing down on him. Imagine what happens if he doesn't get re-elected. And all of a sudden then, he has no more sort of insulation from the IRS. He faces a whole host of problems that we as a country have never had to deal with that are a direct outcome of his choice not to divest from his businesses. And, you know, Michael, the other thing is, you know, we don't know the toll that the coronavirus has taken on his properties. I mean, they were very

susceptible to what happened, their retail, their golf, and that has put another added pressure on him, the financial health or lack of his properties. Russ and Sue, there has been so much speculation about why exactly the president has refused to share his taxes. And it now seems from everything you've said here that a big reason, maybe the biggest reason, is that they reveal he never really makes money. You're right, Michael. There's been so much speculation about why he would refuse to release these returns, why he would refuse to follow these historical precedents. People have jumped to incredible conclusions about the possibility there. But you don't have to look too far in this. The material that's in these records is an existential threat to the way

Donald Trump sees himself and the way he presents himself to the world. Presenting himself as a great businessman is everything. And on every line of these records, there's evidence to the contrary. And I think that's reason enough to explain why he fights so desperately to keep them from public view. It's interesting to hear all this reporting from you, Sue and Russ, because of all the issues happening right now in the country, of all the issues that voters are pulled about. The one issue that Donald Trump consistently does well on is the issue of the economy, his handling of America's finances. Even, according to what you are now telling us, as personally, it appears like he's struggling with his finances profoundly. And I wonder what you make of that. Well, it is interesting. On a larger kind

of level, he's sort of done to the federal government what he's done to a lot of his businesses, which is run up very high costs, far greater than what the revenue can support. That's why we have this mounting deficit even before this horrible virus stalled our entire economy. And we're going to be paying for that in the years to come, much as he's going to be paying for the decisions that he's made in the past several years. I think for all the documents that we've gone through and all the analysis we've done, I think what a lot of this boils down to is, you know, Donald Trump, I think more than any other American, he's burnished this image of himself

as this successful businessman. He sold that idea to the American public. And, you know, his pitch was, I'm a successful guy, and I will do for, you know, what I did at my companies, I'll do it for this country. And now we have the evidence from his own taxes. These are numbers that he reports that shows that that story just isn't true. But there are some missing pieces here. For example, the documents don't measure the president's net worth. And there's some dead ends. You know, we went into the documents and we could see money transfers.

And when we went to see who transferred the money, all we could see was the financial institution that the money went through. We couldn't see the actual sender. So we're just going to keep digging. Russ, Sue, thank you very, very much. We appreciate it. Thank you, Michael. Thank you, Michael. Thank you, Michael. On Monday, lawmakers from both parties reacted to the Times investigation. And I do know that if there is a review of somebody, if they're going to be federally appointed to a job or whatever, if they have outstanding debt, that is an important factor because that means somebody else has leverage over them. Democrats, led by House Speaker Nancy Pelosi, said that the president's enormous debt raised questions about his fitness for office.

This president appears to have over $400 million in debt, $420, whatever it is, million dollars in debt. To whom? Different countries? What is the leverage they have? So for me, this is a national security question. Republicans, meanwhile, either ignored reporters' questions about the president's taxes or, in the case of Senator Chuck Grassley of Iowa, criticized the IRS rather than Trump. Grassley said, quote, the thought that comes to my mind is how come it's taking the IRS so long to get the audits done. President Trump, for his part, accused the Times in a tweet of illegally obtaining his tax data,

a claim that the Times called untrue. The paper has said that all the data it obtained was provided by sources with legal access to the information. We'll be right back. Here's what else you need to know today. Here's what else you need to know today. On Monday night, the Times reported that the coronavirus has claimed the lives of more than 1 million people worldwide, a staggering death toll for a 10-month-old disease. Since the pandemic began, the virus has killed more people than malaria, influenza, cholera, and measles combined.

And President Trump and former Vice President Joe Biden will face off tonight in the first official debate of the general election, a closely watched confrontation that will showcase two very different styles of communication. The debate begins at 9 p.m. Eastern and will be covered on tomorrow's show. That's it for The Daily. I'm Michael Bavaro. See you tomorrow.