President Donald Trump's businesses allegedly lost more than $1 billion between 1985 and 1994, according to a report from The New York Times, which obtained 10 years of the president's tax transcripts.
In total, Trump is said to have lost $1.17 billion over the course of that decade, hemorrhaging more than $250 million per year in 1990 and 1991. He did not pay any income taxes for 8 of those 10 years. The knee-jerk reaction is that he's a phony or a criminal—or both. The reality, though, is likely much more complex.
For starters, it's impossible to lose a billion dollars if you don't have a billion dollars, as Josh Barro points out over at New York Magazine. He writes:
Maybe Donald Trump had massive income in the years before 1985, allowing him to build up a billion-plus-dollar fortune and then later lose it. But those were the early years of his real-estate career, when he took on smaller projects than the ones that later nearly ruined him, like the Trump Shuttle and the once-planned Television City development on the Upper West Side. Trump has long claimed to be a billionaire, but it's unlikely those claims were true so far back in the past.
Trump claims the Times article is moot and that he wrote off his depreciating buildings in what's known as a tax shelter. "Almost all real estate developers" took similar approaches, he says, often choosing to "re-negotiate with banks, it was sport."
That alone wouldn't explain his outrageous losses. As the Times points out, he lost considerably more than any other taxpayer in the U.S. in both 1990 and 1991; if he exclusively set up tax shelters, then his transcripts should be in line with other high-profile real estate developers of the time. They're not.
Trump's approach, then, likely consisted of carrying over losses from previous years, which, according to Joseph Bishop-Henchman of the Tax Foundation, is a "pretty standard" and "justifiable" feature of the tax code. "If you lose a lot of money in one year, and then you're profitable in subsequent years you can carry over those losses," Bishop-Henchman tells Reason.
What those losses were, though, remains a mystery—and it'll likely stay that way.
"He's unlike a lot of other businesspeople in that he has these hundreds of subsidiary organizations, a lot of royalty income, and I think it would be hard for anyone to pull it all apart," says Bishop-Henchman. In that same vein, New York Magazine's Barro posits that Trump claimed credit for financial losses experienced by the intricate web of people that he associated with, like the banks that loaned him cash. That loophole was closed by Congress in 2002.
Taken at face value, however, the report certainly provides fodder for Trump's foes, many of whom seek to challenge the president's self-made entrepreneurial brand.
The Times report comes as the House of Representatives' Democratic majority pressures Trump to release the last six years of his tax returns. Treasury Secretary Steve Mnuchin said Monday that he will not hand them over, citing objections the Justice Department raised in a letter to House Ways and Means Committee Chairman Rep. Richard Neal (D–Mass.).
"Out of respect for the deadlines previously set by the Committee, and consistent with our commitment to a prompt response, I am informing you now that the Department may not lawfully fulfill the Committee's request," Mnuchin wrote.
Neal requested the documents by citing a tax code provision that gives his committee authority to retrieve such documents from the Treasury Department, which oversees the Internal Revenue Service. Mnuchin argued that the House "lacks a legitimate legislative purpose" in seeking Trump's tax returns, and the government is therefore not obligated to provide them.
Mnuchin's response to Congress echoes the White House's assertion that the request is nothing more than thinly veiled partisan hackery. William Consovoy, Trump's personal attorney, wrote that it's "a transparent effort by one political party to harass an official from the other party because they dislike his politics and his speech." House Democrats, in turn, say they want to investigate Trump's business dealings for evidence of foreign influence.
Those suspicions seem rooted in wishful thinking, particularly since Special Counsel Robert Mueller's investigation has concluded and Trump is still in the White House. Perhaps all Trump has to hide is a business empire driven by someone who appears to be unversed in "the art of the deal." With the 2020 election around the corner, the latter might be worse.