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After years of secrecy, President Trump's finances are examined in a New York Times investigative report. What does it tell us about his business practices and income taxes? David Cay Johnston, an investigative journalist and author who has long followed President Trump’s business dealings, and Peter Faber, a tax attorney who often advises wealthy clients, join Judy Woodruff to discuss.
Questions about federal income taxes are swirling around President Trump again tonight.
The issue has surfaced repeatedly since he first began running for president in 2015. Now a published report says that he has paid little or nothing in taxes for years in a row.
White House correspondent Yamiche Alcindor begins our coverage.
A blockbuster New York Times story, President Trump on defense over his taxes, and all this just one day before his first debate with former Vice President Joe Biden.
This morning, the White House was quick to put out Press Secretary Kayleigh McEnany.
We have seen this play out before, where there was a hit piece about the president's taxes just before a debate, and an inaccurate one, at that. This is the same playbook they tried in 2016, the same playbook that the American people rejected and will do so again.
The Times says it obtained the president's tax records from the last two decades. It reports that the documents show he paid just $750 in federal taxes in 2016 and $750 in 2017.
And it concluded he paid no income taxes for at least 10 years. It also says, in part: "He depends more and more on making money from businesses that put him in potential and often direct conflict of interests with his job as president" and that 'Mr. Trump has been more successful playing a business mogul than being one in real life."
In a tweet today, the president claims to have paid — quote — "many millions of dollars in taxes, but was entitled to depreciation and tax credit."
And in a news conference yesterday, he dismissed The Times' findings.
President Donald Trump:
It's fake news. It's totally fake news, made-up, fake.
The Times also reports the president faces chronic financial losses and he faces hundreds of millions of debt coming due in the years just ahead.
The Biden campaign quickly rolled out an ad highlighting taxes paid by working Americans, condemning the president's alleged evasion of his share.
House Speaker Nancy Pelosi said the findings raise national security questions.
House Speaker Nancy Pelosi, D-Calif.:
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?
In a phone interview with MSNBC, President Trump's former lawyer Michael Cohen said the findings are disgraceful. He is now disbarred and serving a three-year federal sentence for campaign finance violations, tax evasion, and lying to Congress.
So, if I went to jail for 36 months on tax evasion, which probably should have been tax omission, Donald Trump should do 360 years.
Meanwhile, Biden continues to prepare for tomorrow's debate. The president's taxes are now sure to be a main topic, as Cleveland, Ohio, hosts 2020's first presidential debate in the general election.
For the "PBS NewsHour," I'm Yamiche Alcindor.
So what does The Times' reporting seem to tell us about President Trump's business practices and how they line up with what other wealthy Americans do when paying their taxes?
For that, we turn to David Cay Johnston, an investigative journalist and author who focuses on tax issues and who has long followed President Trump's business dealings. And Peter Faber, he's a tax attorney who often advises wealthy clients.
Hello to both of you. Thank you so much for joining us.
David Cay Johnston, you have looked at Donald Trump's businesses for a long time. What do you make of what you are seeing in The Times' report?
David Cay Johnston:
Well, the reason Donald does not want you to see his tax returns is quite clear. He didn't pay taxes in many years.
And, secondly, there is a great deal of evidence in The Times' report Donald is not doing this through lawful tax avoidance, but he is engaged in tax evasion. That is not a new thing for the president. He had two civil trials for income tax fraud in the past, and he lost them, and a judge found that he had forged a document.
And let's get to that in just a minute.
But let me bring Peter Faber in.
You have advised a number of wealthy people. How does the president's tax picture compare to that of somebody else of great wealth and how they file their taxes?
Well, Judy, it is fairly typical of a person who is in the real estate business.
Real estate people, even though, very often, they have loads of income, have legitimate deductions. And it is not unusual for a real estate person to have very little, and, in many cases, no income tax liability.
So, David Cay Johnston, that being the case, if it is fairly common for people in real estate not to pay a lot of taxes, whether because of depreciation or other advantages, what makes this extraordinary in your mind?
I agree with Peter.
If you're a big enough family in real estate and you're paying income taxes, frankly, I would tell you, you should sue your tax lawyer for malpractice.
But Donald's businesses are primarily areas where he doesn't have that kind of depreciation, licensing deals from overseas, for example, and his television show. And The Times' documents show things such as the deduction of what The Times says are personal legal expenses, what looks to be a disguised gift of about $720,000 to Ivanka Trump from her father, rather than paying the gift tax on it, and deductions, $1.4 billion in deductions for just two years, 2009, not a sort of steady plane over time of income tax deductions as you write down the value of building.
Peter Faber, let me ask you about a couple of those things, number one, a lot of depreciation when he doesn't own as much as he did at one point earlier in his career, and then the question about how much of his business is licensing deals, rather than ownership.
Yes, I think The Times doesn't go into detail about how much he takes as depreciation deductions and so on.
But what The Times does point out is that there are a lot of items that he has claimed as business expenses that arguably are personal expenses, for example, the cost of maintaining the Seven Springs resort in Westchester County.
The payment to Ivanka that David points out, allegedly a consulting fee of $700,000, may well be a disguised gift. I think there are a lot. There also are apparently lump sum deductions for legal fees. And we don't know what is in those legal fees and whether they are, in fact, legitimate business expenses.
There's been speculation that they may include the payments to Stormy Daniels. If so, that would not be a legitimate business expense.
One of the things, David Cay Johnston, that others have raised is that $750 — he says he's paid tens of millions in taxes in recent years.
Could both be true? Could he be — could he have paid 750 — $750 two years in a row and paid tens of millions?
President Trump did not break down what he meant by that. There are lots of taxes, besides the facts — there are state taxes, foreign taxes.
He paid the Philippines government over $100,000 in taxes one of the years he paid $750 to the American government. So, if you look at all of his taxes, property taxes, payroll taxes for employees, sure, you can come up with that kind of a number.
But the fact is that, in the majority of the years in this century, he paid no income taxes, and some of the taxes he paid for refundable taxes. In 2005, he paid about $36 million to something called Alternative Minimum Tax, which he got refunded in future years.
It was really a short-term zero interest loan to Uncle Sam.
And, Peter Faber, so many things to ask you about, but one of the things that comes through here is, the president owes 300 million-some-odd dollars in coming years to be paid back in the next four years.
That's a lot of money. Is it clear that he has the money to pay that back? What does that tell you?
Well, we don't know if he has the money to pay it back.
My guess is that he doesn't have a huge amount of cash, or that's not apparent from The Times reporting. But, typically, people in business use their cash. They reinvest it. They don't have millions and millions and hundreds of millions of dollars in cash sitting around in a bank account.
So, my guess is, that's going to be a real problem for him in the next few years.
And, Peter Faber, what questions do you have?
In order to get a full picture of whether the president has paid his fair share of taxes, what else do you need to know, do we need to know?
Well, if I were an IRS agent, I'd want to know a breakdown of all the items he's claimed in his lump sum of business expense deductions. I would like to know details about who he paid, for what, how much and when.
There's a — you can hide a lot of detail amidst generalities. And I agree with David. I think the American people have a right to know the details, not just the generalities.
One other thing, Peter Faber.
Today, the chairman of the Senate Finance Committee, Senator Chuck Grassley of Iowa, when he was asked about this Times report, said — he said he's asking — he said: "I'm asking, how come it's taking the IRS so long to get these audits done?" He said: "I'm concerned they're not getting their work done."
Is it common for the IRS to take years and years to do audits like this?
It really shouldn't take that long. And, again, we don't know the details. We don't know what issues have been raised.
Obviously, Mr. Trump's tax returns are more complicated than yours and mine. But, nevertheless, it shouldn't take years and years and years to complete an audit. I was surprised to read that.
And, David Cay Johnston, a comment about that, about the audits?
Trump can resolve all of these issues by just releasing his tax returns. At least release your 1040s, and let's see what's going on here.
And Congress should hold hearings on how we audit the returns of wealthy people. Less than 3 percent of people who make over a million dollars a year, including people who make billions of dollars in a single year, are being audited these days, because we have slashed the IRS. We have gotten rid of one-third of IRS auditors in just the last 10 years.
Well, we're going to leave it there.
We thank both of you for helping shed some light on this massive amount of reporting by The New York Times.
David Cay Johnston, Peter Faber, thank you both.
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