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By now you have probably heard that the great white whale of American politics — or one of them, at least — has finally been found. On Sunday, The Times published an investigation of President Trump’s tax records that he has for years fought to conceal, and the findings were striking: Through claims of staggering business losses, a dubious refund scheme and questionable write-offs (e.g., expensing $70,000 for hairstyling, as one does), Mr. Trump was able to reduce his federal income tax bill in 10 of the 15 years before his election to $0. In 2016 and 2017, he paid just $750 a year.
Those figures have received a great deal of attention, but the story has also raised broader questions about the president’s finances, his potential conflicts of interest and the legal structure that made his tax avoidance possible. Here are a few of them.
But as the Times reporters who conducted the investigation pointed out, tax returns do not tell the full story of Mr. Trump’s finances. They are his own portrayal of his companies compiled for the I.R.S., not the findings of an independent examination, and they do not reveal his true wealth.
In fact, even taking into account his debts, Dan Alexander at Forbes estimates that Mr. Trump is still worth some $2.5 billion. “Don’t be fooled: The news is not that the president is broke,” he writes. “The news, instead, is that Donald Trump seems to have avoided paying much in taxes despite significant operating profits at certain properties. In other words, he figured out how to share very little of his fortune with the country he now leads.”
As a tactical matter, Josh Barro argues in New York magazine that this is an important distinction for Democrats to maintain, since if the president had been as poor a businessman as some claim, he wouldn’t have had any obligation to pay income taxes in the first place. “It’s more accurate and more powerful to say he’s a plutocrat with a high income who manipulated the tax code in a way that was unusual even for a very rich person, and who has used his power in office to make the tax code even more favorable to rich people like him,” Mr. Barro writes. “That’s the key lesson to draw from his low tax bills.”
Is Trump’s debt a national security threat?
Whatever the real value of his assets are, Mr. Trump’s tax returns at least confirm that he is deeply in debt. He is responsible for loans totaling $421 million, most of which will come due within four years. He may also find himself on the hook for an I.R.S. bill of more than $100 million because of a refund he claimed that remains under audit. Mr. Alexander puts the president’s debt even higher: $1.13 billion.
That amount of leverage puts Mr. Trump in a compromised position, writes Timothy L. O’Brien, one of Mr. Trump’s biographers, in Bloomberg. “If Trump is unable to meet his debt payments, he’s either going to have to sell assets or get bailed out by a friend with funds,” he reasons. “Trump has never liked to sell anything, even when it’s hemorrhaging money. So if he’s tempted to save himself by getting a handout, that makes him a mark.”
Among those best positioned to lend him a helping hand are international oligarchs, the Times columnist Michelle Goldberg argues, including President Vladimir Putin of Russia and the Saudi crown prince, Mohammed bin Salman. “Trump’s brand, perhaps his most lucrative asset, is worthless in much of the country,” she writes. “Perhaps the president simply feels a kinship with rich villains. But if he’s truly facing ruin, Trump needs them at least as much as they need him.”
The question of whom the president owes his debts to is already sparking speculation about his potential vulnerability to foreign influence. “Americans should be concerned about the president’s debt because it’s a national security risk for our country,” said Donald Sherman, deputy director of the nonprofit government watchdog group Citizens for Responsibility and Ethics in Washington. While it is well known that Mr. Trump received loans from Deutsche Bank, some analysts, including the chief ethics attorney under President George W. Bush’s administration, have questioned why the bank would have continued doing business with someone with such a poor financial record.
“Why would banks assume the risk on these loans?” he asked. “Or did someone else quietly assume risk of that loan for the bank to make it happen?”
Adam Davidson, a staff writer at The New Yorker, expanded on the question of Mr. Trump’s creditors in a Twitter thread:
How do we fix America’s broken tax system?
As Jeff Wise writes for New York magazine, the tax schemes revealed in the Times investigation may be unsavory, but they are not necessarily illegal. “What you have,” a former I.R.S. criminal investigator told him, “is a pattern of constantly pushing the envelope, exploiting every tax advantage that the Internal Revenue Code legitimately provides.”
Indeed, The Times editorial board writes, Mr. Trump’s tax returns are best thought of as a particularly lurid illustration of the profound unfairness that pervades the U.S. tax system. Over the past 70 years, the government has sharply reduced the tax rate for the richest Americans, to 23 percent from 70 percent, while the I.R.S., hollowed out by budget cuts, has resigned itself to spending more and more of its dwindling resources auditing low-income people who can’t afford to hire expensive tax attorneys. If current trends continue over the next decade, the federal government will fail to collect $7.5 trillion in taxes — about 15 percent of the total amount owed.
There are many ways the system could be made fairer. One involves simply reverting to the more progressive tax code the United States had in the middle of the 20th century, when the top marginal income tax rate peaked at 92 percent. But some economists, such as Gabriel Zucman of the University of California, Berkeley, argue that a tax on wealth, not just income, is also needed. “It won’t fix everything,” Dr. Zucman wrote on Twitter. “But it will address the key problem that for the super wealthy, taxable income can often be reduced to low levels.”
But to start with, the editorial board argues that the government should work on collecting the taxes it is already owed. Just by fully restoring I.R.S. funding and modernizing its collection techniques, the government could collect $1 trillion in unpaid taxes, according to one estimate.
“Cracking down on rich tax cheats is law enforcement. It is a basic function of government to ensure that people are playing by the rules.,” the board writes. “Strict enforcement should start with the president, to show that no American is above the law.”
Will voters care?
It’s the question, both cynical and justified, that looms over every damnatory story about the president. As Katrina vanden Heuvel writes in The Washington Post: “Trump’s tax returns don’t expose anything shockingly new about his character. We already knew he was a bounder surrounded by grifters.”
Be that as it may, Alex Shephard argues in The New Republic that the latest revelations are different. The president has a devoted base, to be sure, but there are many voters who are neither loyal Democrats nor avowed Trump supporters whose view of him could be swayed by this news, especially since the president’s one consistent polling advantage over Joe Biden pertains to his handling of the economy. “Trump’s tax returns reveal a businessman adept only at losing hundreds of millions, if not billions, of dollars,” he writes. “He might literally be the worst businessman in America.”
And then there is that particularly rich vein of indignation that runs through America’s relationship to taxation that the Biden campaign has already started tapping. As my colleague Nikole Hannah-Jones tweeted, “One does not have to be surprised in order to be outraged.”
Do you have a point of view we missed? Email us at debatable@nytimes.com. Please note your name, age and location in your response, which may be included in the next newsletter.
MORE ON TRUMP’S TAXES
“What we know — and still want to know — about Trump’s company” [The Washington Post]
“Trump’s Debt, His Future and Ours” [The New York Times]
“Donald Trump Barely Pays Any Taxes: Will Anyone Care?” [The New Yorker]
“Stop assuming voters won’t care about Trump’s taxes” [The Week]
WHAT YOU’RE SAYING
Here’s what readers had to say about the last edition: What have we learned about coronavirus immunity?
Carol from Arizona: “One point you didn’t make is that when people achieve herd immunity through immunization by getting a shot, most have few if any unpleasant symptoms — nothing intolerable in my experience. But achieving herd immunity by allowing the virus to run rampant through a population, allowing it to spread indiscriminately, infecting as many people as possible as quickly as possible, leads to much pain, suffering, death and disruption in the community before immunity is achieved.”
Francesca from Maryland: “With more becoming known about ‘long-haul Covid,’ it would be crass and uncaring to think that herd immunity is the way to go.”