- David Cay Johnstonfounder and editor-in-chief of DCReport.org.
Ahead of the first of three presidential debates between President Trump and Joe Biden, we speak with David Cay Johnston, founder and editor-in-chief of DCReport.org, who says the bombshell New York Times report on Trump’s taxes highlights the existence of “two income tax systems, separate and unequal.” The Times reports that Trump paid no federal income tax in 10 of the past 15 years and just $750 in 2016 and 2017. In a follow-up report, the Times reveals Trump made $427 million in connection to the hit reality TV show “The Apprentice,” providing him a financial lifeline as other investments lost money. “People who own their own businesses, like Donald Trump, are under a different system,” says Johnston.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The Quarantine Report. I’m Amy Goodman, with Juan González.
When President Trump and Joe Biden meet tonight for their first of three presidential debates — and you can watch it here at democracynow.org at 9 Eastern [Daylight] — Trump is expected to face questions about the bombshell report in The New York Times that revealed he paid no federal income tax in 10 of the past 15 years and just $750 in 2016 and '17. In a follow-up report, the Times reveals Trump made $427 million off the hit reality TV show The Apprentice, providing him a financial lifeline as other investments lost money. The Times reports, quote, “Mr. Trump's genius, it turned out, wasn’t running a company. It was making himself famous — Trump-scale famous — and monetizing that fame,” unquote.
Well, the Biden campaign responded quickly on Sunday to The New York Times exposé with a video ad showing the typical income taxes paid by workers compared to Trump. Teachers paid $7,239. Firefighters paid $5,283. Nurses paid, oh, $10,216. Donald Trump paid $750, while boasting he’s a billionaire.
The Times reports also detail Trump’s questionable write-offs in tax filings from major business losses and massive debts, including more than $300 million in loans that will come due in the next four years. The revelations have raised national security concerns, with Democratic Senator Elizabeth Warren saying, quote, “He may be vulnerable to financial blackmail from a hostile foreign power and God knows what else.” He paid more in taxes to the Philippines and India than he did to the United States.
For more, we’re joined by David Cay Johnston, Pulitzer Prize-winning investigative reporter who has reported extensively on Donald Trump and his taxes for more than 30 years. Previously, he worked with The New York Times, now co-founder and editor of DCReport.org. His most recent book, It’s Even Worse Than You Think: What the Trump Administration Is Doing to America.
So, you have written, David Cay Johnston, “I think there’s lots of evidence that Donald Trump is a criminal-level tax cheat.” Is this true you think if he were not reelected, he could go to jail on these charges?
DAVID CAY JOHNSTON: Well, whether he goes to jail is ultimately the decision of a judge after a trial and conviction. Does he deserve to go to jail? Oh, absolutely. But on the federal level in this country, where we have about 155 million tax returns filed each year, we only prosecute about 1,200 people, and most of those are drug dealers or politicians who took bribes. There is no serious effort in the United States to prosecute tax criminals. In fact, the IRS is aware of more than a half-million people who made a high income, did not even file a tax return in 2014, '15 or ’16, and they're not even trying to pursue them, because they have no money. The Congress has cut and cut the IRS. In just the last 10 years, they’ve gotten rid of one-third of the auditors. If you make a million dollars or more — we have people in America, Amy, who make several billion dollars a year — your odds of being audited are less than three in a hundred.
JUAN GONZÁLEZ: And, David, I wanted to ask you about the Times piece not only yesterday, but today, as well, because there’s a lot of new information in there. Especially, there was this mention of this $72 million tax refund that Trump claimed, in the few years that he actually did pay taxes. He then apparently got a refund, because he was claiming, I guess, carryovers of previous losses to get that money back. Could you explain this whole issue of capital gains and how ultra-wealthy people use losses in future years to not pay taxes?
DAVID CAY JOHNSTON: Well, corporations, but not individuals, are allowed to smooth out their income for tax purposes. So, a business makes a profit, say, in seven years and loses money in three, they get to use the three losing years to offset their profits from the others.
Trump did something different. When I got Donald’s 2005 income tax return, he only paid $3 million of regular income tax on an income of over $150 million. He paid a lower rate than the poorest half of American taxpayers, who that year made, on average, $16,000. But he did pay another $35 million of what’s called alternative minimum tax. And for real estate developers, that’s not really a tax.
What happens is, the accounting rules cause you to pay the tax one year, and then the government gives it back to you in future years if you stay in the real estate business. Essentially, the government takes from you a zero-interest loan for a year.
Now, Trump’s refund of $72 million-plus is supposed to be held back until it is reviewed by the staff of the congressional Joint Committee on Taxation. Any refund of more than $2 million is supposed to be reviewed first by the joint committee. Trump got the refund. He got the check. It’s not clear if there was a mistake made here or the joint committee passed on it. If they did, it’s probably because it was seen as an alternative minimum tax refund.
But Donald’s claim, you know, that he pays a lot of taxes is based on not really paying taxes. It’s based on this system in which real estate developers may end up loaning the government money for a year or two at zero interest. That’s not a tax.
JUAN GONZÁLEZ: And I wanted to ask you about the, in today’s article in the Times, section that’s kind of buried deep in the story, but it does begin to point at what could be a possible Russia connection, in addition to the Miss Universe contest that they talked about yesterday, this Bayrock Group, that actually rented offices right below the Trump offices in the Trump Tower and that financed a huge amount of the foreign ventures of the Trump Organization. Could you talk about them? Because they were basically being run by Russian oligarchs.
DAVID CAY JOHNSTON: Right. I’ve written a lot about this. And interestingly, Dutch television — I think it’s pronounced Zembla — has done really excellent work about this.
Donald Trump has long been connected with mobsters of all kinds, not just New York City mafioso, but all sorts, particularly of Russian-speaking mobsters. And he had in his office a convicted violent felon who worked for him named Felix Sater. Trump has said, “I wouldn’t recognize him if I was in the room.” I’ve got photo and video of them traveling all over the country and doing deals — none of which worked out — together, and some of which appear to be scams. Trump has very deep financial connections to the Russian oligarchs, who are essentially a criminal gang. And this is the area of national security that should most worry Americans about Donald Trump.
The pageant, the only beauty pageant — remember, Donald has boasted about how he had the right to walk in on half-naked teenage girls at his beauty pageants because he owned them. That’s the kind of creep he is. The only one of his beauty pageants that made money was the 2013 pageant in Moscow. Well, was it really a profit they made, or was it Vladimir Putin or one of his agents putting money in Donald’s pocket in order to curry favor with him? And remember, Donald has never said a single negative word about Vladimir Putin. In fact, he has said, “I trust Vladimir Putin, but I don’t trust the American intelligence agencies.”
AMY GOODMAN: You know, the Times —
DAVID CAY JOHNSTON: There’s a lot more [inaudible]. There’s a lot more. I’m sorry, Amy.
AMY GOODMAN: The Times did find — they made the point that the tax documents do not reveal any previously unreported connections to Russia. However, they talk about the amount of money he paid to the Philippines, the amount of money he paid to India. And then, a larger point, that a number of people have raised, is: Does this make him a national security risk? If these loans are going to come due, these debts of over $400 million, what’s he going to do to deal with this? And did he sign off on laws as president that benefit him personally?
DAVID CAY JOHNSTON: Well, let’s deal with the forthcoming loans. It’s very clear from the Times reporting that Donald does not have the resources to pay back more than $300 million of loans he personally guaranteed. Now, if you are an actual billionaire, which Donald has never been, and you own valuable assets, you don’t have to personally guarantee a loan. You just pledge the assets as collateral. So, that’s the first thing that tells you that Donald is not and, as I’ve reported as far back as 1990, never has been a billionaire. It’s just a fraud, a hoax by him.
These loans would come due during a second Trump term. Well, the resolution of that’s, I think, pretty obvious. Donald Trump appoints the banking regulators in the United States. He controls the banking regulation system. Do you think any bank, licensed by the government, is going to foreclose on the president of the United States? No. They’re going to give him what’s called a forbearance. “Well, we’ll extend the terms of your loan, sir. Perhaps you would like a holiday on your payments. Could we lower the interest rate for you, sir? Please, what could we do as bankers?”
JUAN GONZÁLEZ: And you’ve said that one of the crucial but unstated messages from this report on Trump’s taxes is that Americans are, quote, “chumps” when it comes to our own income taxes. Could you expand on that?
DAVID CAY JOHNSTON: Well, I’ve been trying to get Americans to understand that what happened, starting with the Reagan administration and the end of the New Deal, is that America devised two income tax systems, separate and unequal. Those of us who are workers or pensioners, as I am, our taxes are withheld before we get our money. The government knows how much money we got. The Trump tax law eliminated itemizing of deductions. Only one in 20 taxpayers now is going to do that, and they’re almost all going to be very rich. You can’t get a deduction for a charitable gift or a home mortgage or state and local taxes anymore in 95 out of 100 households.
But people who own their own business, like Donald Trump, they are under a different system. Congress doesn’t trust us. That’s why it takes the taxes out first. But Congress trusts Donald Trump and everyone like him, that they will fully and faithfully report the actual income they had, and then they will pay all the taxes that they owe. And the only check on that are audits.
So, what has Congress been doing, in particularly the George W. Bush administration, the Reagan administration — well, a little bit in the Reagan administration, and under Donald Trump? Well, they’ve been getting rid of auditors, so that your odds, if you’re a million-dollar-plus income person, of being audited, as I said, are less than 3% a year.
And even then, the IRS is so badly underfunded and understaffed, that at DCReport we did a five-part story last year about the third Koch brother, Bill Koch, who is getting $100 million a year and paying no income taxes, through a device that I think is clearly improper, arguably criminal. We proved with documents — he was under criminal investigation He’s the only Koch brother who supports Donald Trump. And a couple of weeks after Donald Trump became president, his next-door neighbor at Mar-a-Lago, Bill Koch’s criminal investigation suddenly stopped.
AMY GOODMAN: Finally, David Cay Johnston, the first presidential debate is tonight. What question do you want to see raised about Donald Trump’s taxes?
DAVID CAY JOHNSTON: Oh, I think the biggest mistake Joe Biden could make would be to somehow attack wealth. That just doesn’t sell in America. I think that what he should do is press him on, “All right, the cat’s out of the bag. You say it’s fake news. Just show us your Form 1040s back to the year 2000. Why don’t you just put out your Form 1040s? One of them is out. David Cay Johnston published it three years ago. Just show those. And we’ll see whether it’s fake news or not.” And Donald will dodge and parry that.
The emails I’m getting from people on the right are all designed to tell you that Joe Biden is a secret crook with a billion-dollar fortune, all of which is utter nonsense, by the way. This is a man who is —
AMY GOODMAN: We have five seconds.
DAVID CAY JOHNSTON: He hasn’t paid off his mortgage.
AMY GOODMAN: Well, David Cay Johnston, I want to thank you for being with us, Pulitzer Prize-winning investigative reporter, editor of DCReport.org, and his most recent book, It’s Even Worse Than You Think: What the Trump Administration Is Doing to America.
Tonight, we will be streaming the first presidential debate live, 9 Eastern [Daylight] Time, at democracynow.org. I’m Amy Goodman, with Juan González. Thanks so much for joining us. Stay safe. Wear a mask.