What Trump's Taxes Would Not Show About His Finances

Apr 18, 2017
Originally published on April 18, 2017 5:46 pm

President Trump is preparing to overhaul the nation's tax code, and at least some of the coming changes could benefit his own bottom line. Critics say voters should be able to see just how much help the president might get from a revised tax code, so they are stepping up efforts to force him to share his tax returns.

Seeing the returns would reveal some key facts about the president's finances, says Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington, or CREW.

"What tax rate is he paying? What deductions and loopholes is he taking advantage of? How are the kinds of tax policies that he's thinking about acting on as president affecting him personally?" says Bookbinder, whose government watchdog group has sued the president, saying Trump's foreign business dealings violate the Emoluments Clause of the Constitution.

But the president's returns — due on Tuesday — might ultimately prove less revealing about Trump's finances than many of his critics suppose, says Lee Sheppard, columnist at Tax Analysts' Tax Notes.

"People have an extravagant idea about what might be on these returns," she says. "A tax return is not a financial disclosure document."

The returns can reveal how much Trump makes in a given year, but not how much he is worth, something that has been a topic of much debate.

Among other things, the returns are likely to shed little light on whom his real estate partnerships owe money to or his alleged financial ties to Russia, Sheppard says.

Trump has steadfastly refused to release his tax returns, saying his lawyers won't allow it because he is under an IRS audit. During the campaign, he promised to release the returns once the audit is finished, but he has since backtracked on that pledge.

Several states have now joined the effort to get the returns released, as NPR's Joel Rose reported:

"Trump is the first president in 40 years not to release any of his tax returns during the campaign. Now lawmakers in dozens of states have introduced bills that would force him to do so. Several of these bills go by the name Tax Returns Uniformly Made Public, or TRUMP Act."

But Sheppard says that as a real estate developer, Trump gets much of his income through partnerships. While he is required to reveal the name of the entity and how much money he receives from it, he doesn't have to name the other partners, whose identities may be obscured behind shell corporations and offshore subsidiaries.

He also may have sizable non-recourse debt, loans that are backed not by Trump himself but by the real estate projects his partnership is developing. Trump is required to say how much interest he pays on the debt incurred, but not how much he owes or who lent him the money, Sheppard says.

"The law is very, very, very solicitous to investors of all stripes, and they come into the partnerships through entities, so the rest of the world doesn't find out who they are," she says.

"I don't know why there's not complaints about that," she adds. "I don't know why somebody doesn't say to some senator or another, 'Well how come you're not making better laws for what gets disclosed on these [returns]?' And the reason should be rather obvious."

But CREW's Bookbinder says it's important to release Trump's returns anyway, as other presidents have been doing for decades.

"I would certainly resist saying that looking at his taxes would be the be-all and end-all, the full picture of his financial situation," he says. "There certainly are ways of hiding money that might not be picked up in tax returns, and there are lots of kind of ties that might not show up there. But there's a lot that would show up, and so it would tell us a lot more than we know now.

"And it might tell us a lot more about where else we need to look to get the full picture."

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Today's federal income tax deadline has triggered new calls for President Trump to reveal his taxes as other presidents have done. Trump has repeatedly refused to do so, saying he is under an IRS audit. As NPR's Jim Zarroli reports, the returns would shed some light, but not as much as you might think.

UNIDENTIFIED WOMAN: (Chanting) No more secrets.

UNIDENTIFIED CROWD: (Chanting) No more lies.

JIM ZARROLI, BYLINE: This weekend, demonstrators in Palm Beach and elsewhere were once again calling on President Trump to release his tax returns. The president's critics say that before he makes any changes in the tax code, Americans deserve to know how he might benefit from them. And that means they need to see what's in the returns.

Noah Bookbinder is executive director of Citizens for Responsibility and Ethics in Washington.

NOAH BOOKBINDER: When he has tweeted out the pictures of his tax returns, it's stacks of paper that are inches and maybe feet high. It's many hundreds of pages. So just - just there, you know that there's a lot of information.

ZARROLI: Information about how much Trump makes, his charitable giving and the deductions and loopholes he takes advantage of. They could also help show how much money he makes overseas.

But Lee Sheppard, contributing editor at Tax Notes, says there's a lot that won't be in the returns.

LEE SHEPPARD: A tax return is not an all-purpose financial-disclosure document in the United States.

ZARROLI: Sheppard says much of Trump's income appears to come from licensing agreements, leasing out his name to sell real estate and luxury goods. The returns will say how much he earned and the name of the partnership paying him, but not the identities of the partners.

They also won't say who invested in real estate projects he owns directly. Sheppard says that as a real estate developer, Trump probably has a lot of what is called non-recourse debt, loans backed not by him personally, but by the real estate project being built. The returns will show how much interest he paid on that debt, but not who lent him the money.

SHEPPARD: When the people who are griping about the tax returns say, we want to know you're beholden to, they're saying they want to know who the lenders are. That is not listed on the tax return.

ZARROLI: Sheppard says the returns probably won't reveal anything about Trump's ties to Russia and China, nor will they say anything about his true net worth. Some of this information is listed in disclosure documents filed during the campaign last year, but in very general terms. Sheppard says to find out more about the president's finances would probably require Congress to act. But that's not likely to happen anytime soon.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.