Donald Trump’s taxes and his net worth are subjects of great mystery and speculation, so why should his income be any different? Again, The Donald does not disappoint when it comes to controversy.
In his financial disclosures with the FEC in 2015, Donald Trump listed $362 million in income for 2014. In a press release in May, Trump claimed $557 million in income from the beginning of 2015 to May 2016. If that is the case, how is Trump able to claim a tax credit aimed at the middle class in New York with an upper income cap of $500,000? It could well be a bureaucratic snafu — or it could be that Trump really does have a low enough income to qualify.
The School Tax Relief Program (STAR) is a New York state property tax relief program that has been in existence since 1997. To qualify, you must own the home and use it as your primary residence, and your family income (you and your spouse combined) cannot exceed $500,000. Crain’s New York Business found an interesting trail of STAR credit claims by Trump, according to New York City officials. Trump claimed the credit between 1999 and 2009 on his New York City penthouse on Fifth Avenue, prior to the $500,000 limit (established in 2011 using 2009 tax information as the baseline). From 2009 to 2013, the claim was associated with Trump’s Park Avenue residence.
In 2014, Trump did not supply a Social Security number as required to remain eligible for STAR and the Park Avenue address was dropped. However, the Fifth Avenue address was reinstated and continues to receive the tax credit, saving Trump a grand total of $304 on his latest quarterly tax statement.
New York State tax authorities are given a list of those receiving STAR benefits and notify New York City of eligible participants. It is possible that perpetuating bureaucratic errors from one or both entities are to blame and that new scrutiny from the Presidential campaign is bringing it to light, as Trump spokespeople have claimed. However, it’s plausible that Trump’s income really does qualify.
Fortune magazine reporter Scott Tully analyzed the 2014 financial disclosure and noted that the quoted $362 million in income is not income but revenue. Income equals revenue minus expenses (and as a businessman, Trump must know the difference between the two).
Given Trump’s many ventures and real estate interests, it is entirely possible that he has enough expenses to reduce his income to zero while his net worth stays relatively high. Business expenses that are related to maintaining the Trump brand may be deducted, leaving significant latitude on the definition of such expenses. Another potential avenue is accelerated depreciation on his properties, which can easily generate millions in offsetting expenses.
Trump surely employs enough clever tax accountants to find offsetting expenses and losses, and past tax returns verify his expertise. According to the Washington Post, Trump’s tax returns for 1978 and 1979, submitted to New Jersey state regulators in order to get a casino license, claimed a combined loss of $3.8 million. A few years prior, Trump claimed a net worth of approximately $200 million (in The New York Times).
Without his tax returns, there is no way to clear up the issue of Trump’s STAR credits definitively unless there are any pronouncements from the New York City Department of Finance (DOF). A spokesperson for Mayor Bill de Blasio says that the DOF is still reviewing Trump’s exemption status.
It seems less likely as time goes on that Trump will release his tax returns and clarify the situation, since he has little to gain and potentially a great deal to lose. Even if his income is legitimately below $500,000 while his net worth remains high, that information could undercut the arguments of his supporters.
However, the more interesting aspect may be why Donald Trump would even trifle over $304 given his net worth. Either he is entitled to the tax credit and is embellishing his net worth, or he is not entitled to it and multiple opportunities to correct the situation have been bypassed. Neither conclusion reflects well on Trump. The real question is: will his supporters care?
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