Despite a claimed billionaire status, Donald Trump only paid $ 750 in taxes in 2016, the date of his election and as much the following year, thanks to tax optimization feats used by large fortunes and multinationals American.
Question: How did he build his empire?
Answer: The American president has always boasted of having made his fortune thanks to his negotiating skills and his flair for real estate. The New York Times revelations paint a much more mixed reality, showing a man who above all knows how to make his own image flourish.
From 2000 to 2018, he earned $ 230 million for lending his name in the form of licenses, to hotels in Azerbaijan or Turkey, or sponsorships, both for cookies and for mattresses.
From his reality show “The Apprentice,” he made $ 197.3 million, according to the New York Times.
But businesses managed directly by Mr. Trump, luxury hotels and residences like Mar-a-Lago in Florida, residential or commercial buildings, golf courses or even attractions such as an ice rink in Central Park, have lost over the period 174 , $ 5 million.
While some buildings like Trump Tower and Trump World Tower in New York are very profitable, golf courses – he owns 19 in total, from Miami to Bali in Indonesia – are a sink of losses. They cost him $ 315 million.
Unlike his father, who made a fortune by renting apartments without too much risk, the president embarked on very risky and complicated sectors to manage, underlines Kevin Riordan, professor of real estate finance at the University of Montclair.
Business is good as long as the economy is good, he notes. But Mr. Trump, says an expert “seems very poorly qualified to lead them when times are tough.”
The tenant of the White House remains nevertheless an “excellent salesman”, able to pass from television to the marketing of vodka.
How much are his fortune and his debts?
His fortune was estimated this month at $ 2.5 billion by Forbes magazine, which says he lost $ 600 million in one year.
The Covid-19 pandemic has in fact emptied its office buildings in Manhattan, dropping their value, as well as that of its hotels, deserted with the collapse of tourism and business travel.
All of these buildings belong to the Trump Organization, a galaxy of companies managed since he was president by two of his sons.
The main source of income for this company is the amount paid by companies to be able to use the Trump name. Such a license is estimated at $ 56 million compared to $ 80 million a year ago, according to Forbes.
Donald Trump is also deeply in debt.
During his 2016 election campaign, he called himself “the king of debt”.
His loans and other personal debts reach $ 421 million, according to the New York Times, which also mentions a home loan of $ 100 million to be repaid before 2022.
Will he be able to meet his deadlines?
Most banks in the United States have stopped doing business with him since a series of bankruptcies in the early 1990s. Deutsche Bank is the exception.
The state of its finances could worsen, estimates the New York Times, if it were to lose a dispute with the American tax authorities on abatements made in 2010.
Q: How did he avoid paying taxes? Is it illegal?
A: The president used tricks to deduct various expenses for business expenses. For example, he subtracted from his taxable income expenses for household linen, silverware, garden maintenance and even his visits to the hairdresser.
He also took advantage of tax credits.
But his strategy is mainly to invest in businesses, like luxury golf clubs, which lose money, which allows him to declare losses and thus compensate his gains.
“One of Donald Trump’s maneuvers to avoid paying taxes was to record his personal expenses as professional expenses, including $ 70,000 for a hairdresser when he participated in The Apprentice,” said Frank Clemente, of the NGO Americans for Tax Fairness.
He adds that: “The real estate sector has managed to take advantage of (legal) loopholes more than any other (sector) in the United States.”
US tax law allows business leaders to carry forward losses to reduce taxes in subsequent years.
It also gives real estate companies the opportunity to use their real estate losses to offset income in other activities.
The New York Times revelations, however, raise questions about the legality of certain practices, such as fee deductions of $ 747,622 paid by the Trump Organization to the consulting firm co-led by his daughter Ivanka Trump.
New York justice is investigating this subject.
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