In the waning moments before this evening’s first debate, let me note another remarkable story by David Fahrenthold in the Washington Post that in any other campaign would by itself qualify as major news.
Fahrenthold reports just now another entanglement between Trump’s business interests and his ostensibly charitable foundation. You should read all the details in his story, but in essence: Trump directed some of his business partners to take at least $2.3 million in money they owed him as normal business expenses, and instead send that money to the Trump Foundation as “donations.”
Why does this matter? Because at face value it’s a tax dodge.
- The person or company paying the money gets to classify the payment as a tax-deductible charitable donation rather than a normal business expense, which in many cases would mean more favorable tax treatment.
- Trump and his companies, which earned this money as income, never have to report it as income at all, and therefore never pay the resulting taxes on it—federal, state, city, payroll, etc. This is so even though, as Fahrenthold has shown in other stories, Trump then freely used the Foundation’s money to pay personal, political, or business expenses. As he summarized in today’s story:
Previously, The Post reported that the Trump Foundation appears to have violated laws against “self-dealing,” which prohibit nonprofit leaders from using charity money to help themselves. In particular, Trump appeared to use $258,000 from the charity to help settle lawsuits involving a golf course and an oceanside club. Trump also spent charity money to buy two portraits of himself, including one that he hung in the bar of one of his golf resorts in Florida.
- If Trump had reported the money as personal income, and then donated it to the foundation, he would have received some tax benefits—but because of deduction-limits and for other reasons, he almost certainly would have owed more tax than he does by not reporting the income at all. Exactly how much money he might have saved is impossible for outsiders to say, since he has refused to turn over his tax returns.
In my memory of politics, this is the closest thing we have seen to prima facie evidence of financial misconduct since Spiro Agnew had to resign as vice president for accepting cash bribes.
Points to reflect on:
- Is this unusual? It certainly seems that way to me. But don’t listen to me; listen to the actual expert Fahrenthold quotes: “‘This is so bizarre, this laundry list of issues,’ said Marc Owens, the longtime head of the Internal Revenue Service office that oversees nonprofit organizations who is now in private practice. ‘It’s the first time I’ve ever seen this, and I’ve been doing this for 25 years in the IRS, and 40 years total.’”
- No nominee in the modern era has had financial arrangements as tangled as Trump’s. Every single major-party nominee since Richard Nixon has disclosed his taxes. Trump, alone, stonewalls. If he gets away with it, this norm in campaign transparency probably will not be restored.
- Every time Fahrenthold asked Trump or his representatives about these transactions, they flat-out denied any of them had taken place, until presented one-by-one with evidence to the contrary. Implication: Anything else they say about his finances should be viewed with extreme skepticism. Also: Presumably there is a reason he refuses to release the information all other recent nominees have turned over.
- For years, and most recently yesterday on the front page of the New York Times, the affairs of the Clinton Foundation, have been the subject of stories about “lingering questions,” “clouds of doubt,” “images of corruption.” Nothing that has even been alleged about Clinton Foundation finances comes close to what is now on the record about the Trump Foundation. This is not a rationalization of anything the Clintons have done wrong; but it underscores the difference in scale between the two operations.
Forty-two days and a few hours until the election; two hours until the debate.