After a yearslong process, former President Donald Trump’s tax returns were publicly released on Friday.
With the release comes several takeaways.
Last week, the House Ways and Means Committee voted 24-16 to release six years’ worth of Trump’s tax returns after a closed-door meeting on Capitol Hill, a major win for Democrats who have been seeking the records for years.
On Friday, those documents, which are made up of thousands of pages, were finally released after being scrubbed of bank account information and Social Security numbers.
Trump paid no income taxes in 2020 and close to nothing in other years
Perhaps the main takeaway from the returns, which included not only Trump’s individual returns but also ones associated with his business entities, was how little in federal income taxes the former president paid over the course of several years.
Trump declared negative income on his federal returns in 2015, 2016, and 2017, with $0 taxable income for each year. Even prior to the release of the actual documents, the Joint Committee on Taxation submitted a report to the ways and means committee that was made public and stated as much.
Trump paid just $750 in 2016 as he was running for office. The former president also paid just $750 during his first year in office. Trump ended up paying nothing in income taxes in 2020, the last year of his presidency. However, in 2018 and 2019, Trump reported an income of nearly $30 million, for which just over $1.1 million was collected by the IRS.
In 2020, the New York Times reported, based on leaked documents from an unknown source, that Trump paid no federal income taxes in 10 of the past 15 years. Trump and his wife, Melania, were able to pay so little in taxes because they reported heavy business losses to offset their income.
IRS failed to audit Trump’s taxes properly
Tax returns filed by a sitting president are, under law, required to be audited by the IRS. Despite accusations from the GOP of obtaining the tax returns to damage Trump, Democrats on the committee contend that they wanted to ensure the IRS was following through on that responsibility.
Last week, Democrats on the committee announced that the IRS had failed in its duty to properly audit Trump while he was in office. In fact, the inquiry found that the IRS didn’t audit Trump for the first two years of his presidency and only began examining in 2019.
Committee Chairman Richard Neal (D-MA) said the reason the returns started to be examined in 2019 was that he started his quest to obtain the documents.
“The Committee expected that these mandatory audits were being conducted promptly and in accordance with IRS policies. However, our review found that under the prior Administration the program was dormant,” Neal said Friday. “We know now, the first mandatory audit was opened two years into his presidency. On the same day this Committee requested his returns.”
Trump-supported SALT cap dinged his own finances
The 2017 Tax Cuts and Jobs Act, perhaps Trump’s greatest legislative achievement (and the single biggest reform to the tax code in decades), put a $10,000 cap on deductions for state and local taxes paid.
While some parts of the reform, which has become known as the Trump tax cuts, reduced the former president’s tax burden, the SALT cap cost him.
For instance, in 2019 and 2020, Trump paid $8.4 million and $8.5 million in state and local taxes, respectively. Because of the cap, he was only able to deduct just $10,000 of those paid taxes on his federal income tax returns.
The SALT cap generated headlines last year when several Democrats and Republicans from high-tax states attempted to alter the cap, arguing that it doesn’t just affect the wealthy, although the Tax Policy Center found that only 3% of middle-income households would pay less in taxes if the cap is removed.
Overseas bank accounts
One interesting tidbit found in Trump’s tax returns was that he reported having a bank account in China in 2015 through 2017. In addition, the former president reported having bank accounts in Ireland and the United Kingdom during that same period of time.
Once 2018 rolled around, Trump no longer reported the accounts in China and Ireland, although he still reported having an account in the U.K. The much-anticipated tax returns also showed that Trump claimed foreign tax credits for taxes paid on several business endeavors in different countries, according to the Associated Press.
Some of Trump’s political enemies have already seized on the revelation given that Trump said during a presidential debate that he believed the account was closed in 2015.
“Generally, you only have bank accounts in a foreign country if you are doing transactions in that country’s currency. What business was Trump doing in China while he was president?” said Daniel Goldman, who served as the Democrats’ counsel during Trump’s first impeachment and is now a congressman-elect from New York.
GOP backlash
Of course, while Democrats are relishing the victory, Republicans have bashed the move and have issued not-so-thinly veiled threats about the precedent this sets.
“Democrats have charged forward with an unprecedented decision to unleash a dangerous new political weapon that reaches far beyond the former president, overturning decades of privacy protections for average Americans that have existed since Watergate,” said ways and means ranking member Kevin Brady (R-TX) after the documents were released on Friday.
Indeed, some Republicans have hinted that once they take over the House next week, they might use the new precedent to probe and release the tax returns of people like President Joe Biden’s son, Hunter Biden, and other targets.
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Rep. Jason Smith (R-MO), one of the three congressmen vying to take Brady’s place and lead the committee, released a statement saying the move to release Trump’s tax returns gives the incoming GOP majority “clear authority” to use these tools to “investigate whether President Biden and his family have enriched themselves off the Washington Democrats’ agenda.”
For his part, Trump bashed the release on Friday and said the move “is going to lead to horrible things for so many people.”
