David Cay Johnston: There is "Incredibly Strong Evidence" Donald Trump Has Committed Tax Fraud

June 16, 2016


David Cay Johnston

Pulitzer Prize-winning investigative reporter previously with The New York Times. He’s a columnist for Investopedia and The Daily Beast. His recent article for The Daily Beast is called "New Evidence Donald Trump Didn’t Pay Taxes."

For months, presumptive Republican presidential nominee Donald Trump has refused to release his tax returns. We speak to Pulitzer Prize-winning reporter David Cay Johnston about what he may be hiding. His latest piece in The Daily Beast is headlined "New Evidence Donald Trump Didn’t Pay Taxes."


This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We’re going to turn now to one of your former colleagues. We’re going to turn to a new exposé in The Daily Beast headlined "New Evidence Donald Trump Didn’t Pay Taxes," the article published as Trump is refusing to release his tax records. Joining us from Rochester, New York City [sic], is the Pulitzer Prize-winning reporter David Cay Johnston. He used to work at The New York Times, now reporting for The Daily Beast and other publications. David, what did you find?

DAVID CAY JOHNSTON: Well, Donald has done a very good job of trying to keep a number of things out of the public record and shut down investigations, but I found two tax appeals he filed from the year 1984, one with the City of New York and one with the state. And in one of these two cases, Donald filed something called a Schedule C. That’s what a freelancer files. He reported zero income and $626,000 of expenses, with no receipts and no documentation. That’s something that could be construed as tax fraud.

During the hearing, which lasted two days, the CPA and lawyer who had done Trump’s tax returns for years was shown the tax return, and he said, "Well, that’s my signature, but I didn’t prepare that tax return." Now, it was a photocopy. And, of course, you can put a name on a document with a photocopy machine. My first big national investigative reporting award was for just such a device used by a corrupt Michigan politician. And The Trump Organization didn’t respond to any of my questions—the Trump campaign—about this. Donald was hit in one case with a 35 percent penalty. And in the other case, the 25 percent penalty was not applied, only because nobody could find the original tax return, which I think suggests that a photocopy is what was mailed in in the first place.

It also shows, in these two cases, that in the year 1984 Donald paid no federal income taxes. And there’s very good reason to think he doesn’t pay them now, because of a provision in federal law that allows large real estate professionals to live without paying income taxes.

AMY GOODMAN: In May on ABC’s Good Morning America, Donald Trump fielded questions from George Stephanopoulos about his tax history.

GEORGE STEPHANOPOULOS: What is your tax rate?

DONALD TRUMP: It’s none of your business. You’ll see it when I release. But I fight very hard to pay as little tax as possible.

AMY GOODMAN: David Cay Johnston?

DAVID CAY JOHNSTON: Well, I think that tells you, the way he snapped at the question, that Donald has no intention of ever producing his tax returns. If he’s elected president, he won’t do so. So my column—I’m not a reporter now, I’m a columnist—my column showed how by adding one line to Section 6103 of the tax code, Congress could make public the returns of presidential candidates who appear on the ballot in many states. And back in the 1920s, tax returns were public record. So there’s no reason not to do this. Those Republicans who are very distressed about Mr. Trump, I would think, might be very interested in this as a way to bring forth the things that trouble them.

AMY GOODMAN: Now, go back to—because you said it very quickly before that clip, go back to why he doesn’t have to pay taxes.

DAVID CAY JOHNSTON: Because if Donald is anywhere near as wealthy as he claims to be, and Donald has acknowledged under oath that he basically makes up numbers that make him look good—if he has enough depreciation from his buildings, he is allowed to use that to offset income from the other things, like selling ties made in China and running golf courses. And that means that he effectively can get a zero-interest loan from the government of his taxes. In my USA Today column back in March, I showed how if Trump’s numbers that he’s publicly said were true, then he stands to make about $130 million net profit off his income taxes from a single year. The taxes would have only been $23 million.

AMY GOODMAN: You write, "The tradition of presidential candidates disclosing their tax returns has an august purpose: making sure that another criminal is not a heartbeat from the presidency or in the Oval Office." You note, "The disclosure tradition dates to when Spiro Agnew resigned as vice president in [1973 and] then plead guilty to a tax crime." Elaborate on this tradition.

DAVID CAY JOHNSTON: Well, when Richard Nixon was in the White House and famously said, "I am not a crook," and his tax returns were being audited, he actually released tax information. It turned out that his tax returns were in fact corrupt. His tax lawyer, Edward Morgan, went to prison over it. Spiro Agnew resigned as vice president and immediately plead to a felony involving a tax crime. So, that’s the reason that candidates have been releasing returns since then. We have, for example, Hillary Clinton and her husband Bill’s tax returns going back to the 1980s. And by the way, they changed the way they do their tax returns because of an article I wrote in The New York Times in 1997 showing that they had paid more than twice as much federal income tax as the law requires, even though they paid almost $10,000 that year for tax advice.

AMY GOODMAN: Now, again, Congress, you’re saying, could, with a very easy one-line amendment to the tax code, force Donald Trump to reveal his hand?

DAVID CAY JOHNSTON: Well, they—what they would do is simply direct the Internal Revenue Service to post the tax returns that it has online for any presidential candidate who appears in, let’s say, 10 or more states. That’s an objective standard, so it would apply to Hillary Clinton, to Donald Trump and Gary Johnson, the Libertarian candidate, and perhaps some others. Trump, no doubt, would try and challenge it as a bill of attainder, which the Constitution prohibits, but if it’s an objective standard, that shouldn’t stand. And I don’t see any reason not to do this. In fact, I think it would be a great public benefit, because Donald Trump signed those tax returns under penalty of perjury. And his assertions that he can’t release them because he’s being audited not only are absurd, but what about all his returns up to the year 2011, which are no longer under audit? And I fault my fellow journalists for not asking him, "Well, where are your 2011 and earlier tax returns, since they’re no longer under audit and that’s your standard for withholding?"

AMY GOODMAN: You also write, "[I]n the 1920s tax returns were public record and newspapers routinely reported the precise income and tax paid by prominent Americans." What changed?

DAVID CAY JOHNSTON: Well, some of those prominent Americans did what wealthy people always do: They spent some money getting people in Congress to change the law so that wouldn’t happen anymore. I actually think it’s a good disinfectant, but in this case I’m proposing that we only make them public for presidential candidates who are going to appear on the ballots of 10—pick a number—10 or 15 or 20 states, and that the government be the one doing the disclosing, because we really do need to know that our president or the people we are going to vote for as president aren’t crooks.

AMY GOODMAN: Do you believe Donald Trump engaged in outright tax fraud?

DAVID CAY JOHNSTON: I think there’s incredibly strong evidence of that. I think that it explains thoroughly Donald’s reasons for not disclosing. The work that was done by the other three reporters who have been on the show, all about things I’ve been intimately familiar with, is excellent and accurate work. Donald has a long history of not paying people, of saying things that are not true—not just to the news media, but under oath—of not paying his bills, of stuffing his own pocket while shorting other people. And to Donald, there’s nothing wrong with that. You have to understand who Donald is. Donald creates his own reality. Donald is a narcissist. And you and I exist for only one of two purposes: either to adore Donald or to be a foil to build more support from those people who adore Donald.

AMY GOODMAN: Well, we have to leave it there.

DAVID CAY JOHNSTON: Empirical reality is a different issue.

AMY GOODMAN: I want to thank you for being with us, David Cay Johnston, also Russ Buettner and Charles Bagli of The New York Times, and to Steve Reilly, speaking to us from USA Today.

I’m Amy Goodman. We have three job openings. Check our website. Thanks for joining us.

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