THE TAXMAN COMETH
If there is one truly excellent thing about having Donald Trump as president, it’s that we get to learn more about obscure areas of the law and constitution. As a lawyer, I know I’m biased about how exciting that may actually be, but hear me out. I got legitimately giddy earlier this year when, after a lull of more than 200 years, we almost had a THIRD AMENDMENT situation, otherwise known as — to quote John Mulaney — THE ARMY CAN’T LIVE IN YA HOUSE.
The past few years has also made the Federal Vacancies Reform Act of 1988 — one of the most boring laws ever — sexier than it ever should have been. Thanks Chad! We’ve had to talk about special counsel rules, inspector general laws, impeachment procedures, the Posse Comitatus and Insurrection Acts, the Logan Act, the Hatch Act, as well as various criminal laws surrounding fraud, perjury, witness tampering, obstruction of justice, campaign finance, election interference, and bribery. Hell, there’s even been some very real, very necessary talk about dusting off the inherent contempt powers of Congress (COME ON, NANCY!). As a lawyer, all the discussion of these rarely-used laws has been endlessly fascinating. As a citizen, it’s been exhausting, demoralizing, and foreboding.
All of these obscure legal discoveries have one thing in common — a statutory scheme that is woefully under-equipped to deal with a president who is corrupt and out of control. Most of these laws are designed as backstops to unethical behavior, conflicts of interest, and unchecked abuses of power. The reason they’re so rarely used is largely because of the ethical norms we’ve developed over centuries. While I am fine with the occasional breaking of norms generally, Trump has decided to break all the wrong ones — all the ones that we used to see as political red lines that would be too perilous for a politician to cross. In short, our system of laws is simply ill-equipped for someone so willing and able to destroy the Overton Window.
It turns out that if you’re the president, most of these laws designed to rein in unethical behavior are surprisingly toothless (except perhaps state-law crimes). Most legal checks on the president involve the US Senate, whether in the form of confirmation of officers, removal from office after impeachment, or simply issuing acts of political disapproval. If a corrupt president controls the Senate, the number of ways that president can be checked for misbehavior falls precipitously.
The latest of these archaic, formerly unimportant laws, are the emoluments clauses of the US Constitution. Black’s Law Dictionary defines emolument as “the profit arising from office or employment; that which is received as a compensation for services, or which is annexed to the possession of office as salary, fees, and perquisites; advantage; gain, public or private.” There is some controversy over exactly what it meant back at the time the Constitution was written, but it seems to basically mean profit or thing of value, not narrowly attached to the job.
There are two emoluments clauses in the constitution, one foreign and one domestic. The foreign clause says this: “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Similarly, the domestic emoluments clause says this: “The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.”
There are some questions as to how these clauses apply to the president and who may enforce them, but these constitutional clauses generally say that — aside from his salary — he may not make money or accept gifts from foreign governments, US States, or the US Federal Government without explicit permission from Congress. Essentially, it’s a constitutional conflicts of interest clause that makes it so that the president cannot be improperly influenced as the head of state (also to ensure we don’t establish a nobility/monarchy system). There hasn’t really been much of a real controversy over the emoluments clauses since the Washington Administration (along with a few land deals, George accepted some paintings from Louis XIV without permission).
Indeed, the only times since then that the clauses have really been invoked have been situations where sitting presidents receive (usually diplomatic) gifts from foreign heads of state. The president will ask congress, as a pro forma request, to keep the item(s). Sometimes Congress says no and demands the gift be donated to the US or sold for the benefit of the US Treasury, or sometimes they let the president keep the item for themselves. Presidents historically have accepted the decision and not made much of it.
Enter Trump.
When he first took office, there were concerns about how he would handle dealing with such a vast and complicated business empire, much of it international, without being subject to profits made from foreign governments (or being susceptible to influence from governments wanting to give him profit). Most prior presidents have placed their assets in a blind trust: a financial mechanism that puts all knowledge and decisions about the contents or status of investments with a legally-responsible trustee to manage. Under such an arrangement, the president would have no control over, or knowledge about, what’s in his portfolio or how his assets are doing until he’s out of office. Trump refused to do this, citing the complexity of his holdings. In order to allay that concern, he transferred day-to-day operations of the business to his children and held a press conference to show off all the paperwork he claimed to have signed removing himself from the company. Nobody in the press was permitted to see any of the documents in the pile of folders (which were obviously just props). The office which audits this sort of thing, the Office of Governmental Ethics (OGE) stated at the time that the provisions put forth by Trump were insufficient. Trump still owns (and probably controls to some extent) the Trump businesses and profits from them and their activities.
Yesterday, the New York Times revealed that they’ve obtained Trump’s tax returns and financial information going back decades. This is no small thing, particularly considering that for years, Trump has fought with everything he has to prevent anyone from seeing them. He took his case to the Supreme Court of the United States so that neither Congress nor the Manhattan District Attorney could obtain his financial documents. Though he was soundly defeated at SCOTUS, he had at least succeeded in delaying that disclosure, likely until after the election. I’m all in favor of not inferring guilt from someone’s silence, but nobody — NOBODY — fights a subpoena all the way to SCOTUS unless there’s something in those documents they don’t want anybody to see. That’s all changed now. As the NYT rolls out more stories from the financial documents, we’ll get an even clearer picture of what he was hiding, but the initial takeaways are pretty staggering:
- Trump personally owes $421 million in loan obligations to various lenders, most of which will come due during the four years of what would be his second term, if he wins.
- Trump paid only $750 in federal taxes for each of 2016 and 2017.
- Despite his substantial losses, Trump claimed a $72 million refund from the IRS in one year, something they are now investigating.
- Trump’s financial condition in 2015 was particularly bad.
First there’s the debt. If you or I wanted to go work for the government and needed a security clearance, they would check out your debt situation. Nobody with this kind of personal debt would ever get a security clearance. By virtue of the office he holds, Trump doesn’t need a clearance, but the fact remains that having this sort of outstanding debt is a colossal security risk, regardless of who owns that debt. The President of the United States, by this fact alone, is arguably compromised because there are people out there with hundreds of millions of dollars worth of leverage over a sitting president. It seems no surprise that a large portion of that debt is owed to Deutsche Bank, a bank that has been caught up with money laundering and other shady stuff, particularly with the Russians.
Second, the amount he paid in federal income tax, $750 per year, is shockingly low, though that number is more of a bad news headline than an indictment. It’s perfectly possible for his losses and debts to be about the same, whereby he would only have to pay a nominal income tax rate. The interesting part here goes back to Michael Cohen, the president’s former attorney (and current agitator). Cohen said in his sworn testimony to Congress that Trump avoids paying taxes by inflating his assets on loan applications and doing the opposite on his taxes.
Time will tell, but if Trump put different valuations on different types of financial documents — one to get better loan terms and the other to avoid paying taxes — then he has potentially committed multiple varieties of fraud. That’s the sort of thing people go to jail for — and while it’s possible that it’s legal, it doesn’t seem to pass the smell test given what we already know. This is the difference between tax avoidance (having a really smart accountant do your taxes so you take full advantage of the tax code and pay less) and tax evasion (unlawfully hiding or misrepresenting assets and income to not pay tax on it).
Third, it turns out Trump’s taxes have actually been under audit by the IRS for a long time (though that’s not a reason to not release them). Everybody just assumed he was lying about that, but the IRS seems to be investigating him for tax fraud, based on a $72 million refund check he got from them — perhaps improperly.
Finally, the other major revelation of the documents so far was the state of his businesses in 2015. They were hemorrhaging money across the board and in really bad shape financially. They needed a boost to the name recognition, a PR boon to get people to come to their properties. Viewed in this light, his quixotic presidential campaign, starting in 2015, makes so much more sense. I’ve always suspected that Trump never actually wanted to be president and the campaign was just a publicity stunt gone horribly right. It’s not like he didn’t try to lose, either…but here we are.
Going back to emoluments in this newfound financial context, Trump had one last chance. Drowning in debt, his businesses failing, he got the opportunity of a lifetime, with all the accouterments of the rich and powerful: the presidency. He would not squander the opportunity.
Since he took office, Trump has been to his various Trump properties more than 500 times. Why does this matter? Because when Trump goes to his properties, a whole entourage of people come with him and the federal government foots the bill. When he holds political events at his properties, all of the proceeds go right back into his pocket. Since he came to office, the Secret Service alone has been billed more than a million dollars for rooms, meals, and other costs at Trump properties. Eric Trump has said that they would either not charge the USSS at all, then he said he’d charge them at cost, then said he’d reimburse the government. Instead, Trump businesses have charged upwards of $650 per night and other charges well above market rate. Is it any wonder why Trump tried to host the G7 Conference at his resort at Doral? Or why Mike Pence was asked to stay in a Trump property that was a three hour drive from his official business in Dublin? It’s profiteering off tax payer dollars, pure and simple.
Foreign governments and business leaders know that Trump benefits from this personally. Saudi Arabia has been spending millions of dollars at his properties since he took office — no wonder Trump protected Saudi Crown Prince Mohammed bin Salman after the Saudis brutally murdered Jamal Khashoggi. The country with the largest number of Trump properties outside the US? Turkey — no wonder Trump abandoned the Kurds in Syria to be slaughtered by the Turks. Properties in the UK? No wonder his COVID travel ban of Europe didn’t include the UK. When T-Mobile and Sprint announced a merger that needed to be approved by the federal government, T-Mobile spent about $1.4 million at Trump properties to curry favor. No wonder that merger got approved.
This is the reason the emoluments clauses of the Constitution exist. To prevent this obvious self-dealing and influence-peddling with foreign governments.
During the campaign, Trump made it a point to tell everyone (i.e. lie) that if he were president, he would never have time to go on vacation or go golfing, he’d be too busy doing his job. Instead, he has spent MUCH more time golfing than Obama ever did, and almost a quarter of his presidency at one of his resorts. Turns out that was true, except playing golf IS the job, he just isn’t working for you. He’s been stealing your tax dollars to pay for his campaign and his debts. He plays golf with the rich and powerful, and pockets the proceeds reimbursed by Uncle Sam. Graft 101.
The reason I think these new revelations from the New York Times will be effective is not because it will change people’s minds — everyone knows Trump is a huckster — but because they’ve finally reached the depths of his psyche where it will get to him. Namely, it shatters the entire mystique of Trump, the amazing businessman and super-awesome billionaire. His well-catered image that he’s the smartest, the best, and the richest is the most important thing in the world to him — and it’s falling apart.
Assuming the NYT reporting is true (if it’s not, Trump could easily refute it) it leaves us with two conclusions. Either he’s a massive fraud who has been dodging his taxes and bills for decades, or he’s a massive failure who continues to only know how to bleed money he borrows from other people. Or both. I vote both. Viewed in this revealing light, it’s clear that everything he’s done since becoming president has been aimed at maintaining that facade of superiority while reaping the rewards of the pillaged taxpayers. His presidency has been one big con to save himself, and his reelection is no different.
Even if it means selling out the United States and its citizens.
