Editor’s Note: Michael D’Antonio is the author of the new book, “The Truth About Trump.” The opinions expressed in this commentary are his.
Donald Trump got to where he is by staying focused on his own wealth, writes Michael D'Antonio
The presidential campaign is his attempt to complete his ultimate work, he says
With the revelation that Donald Trump claimed a $916 million loss on his 1995 tax forms, it now seems possible that he didn’t pay a penny in income taxes for a decade or more, as income losses can be counted in later years. Trump has said that avoiding taxes makes him “smart,” so The New York Times bombshell could be seen as confirmation of his genius. (His surrogates said so Sunday.)
However, it also calls into question qualities Trump promotes even more – his wealth and business acumen. And it leaves many asking questions about a system that allows a man who has always enjoyed a lavish lifestyle and great net worth to carry such a light tax burden.
The GOP presidential candidate’s true income, along with the taxes he has paid, is the information that the press has been seeking by calling for him to release his personal tax documents. Every major party candidate since Richard Nixon has made their returns public. Trump’s refusal to release his returns, which he says is because they are under audit, has sent journalists scrambling for whatever they can discover about his financial condition. The Times report suggests that the man running for president is not quite the winner he claims to be.
Trump’s $916 million loss was posted years after he had begun to brag about recovering from the bankruptcies of the Trump Taj Mahal Casino and Trump Plaza hotel in Atlantic City, as well as the humbling debacle that was the Trump Shuttle, which went out of business in 1992.
In the fall of that year, Trump actually put on a big bash for himself where he celebrated his own supposed comeback. The scene was the ultimate display of Trumpian excess, with entertainers impersonating Marilyn Monroe and Elvis Presley before the theme music from the movie “Rocky” filled the hall. Finally, an announcer bellowed “Let’s hear it for the king!” and Trump, wearing red boxing gloves and a robe, burst through a paper screen. One of his casino executives declared his boss was back as a “winner.”
Protected behind a wall of secrecy, where he kept all the accurate figures about profit and loss, as well as his tax returns, Trump had the audacity in 1990 to publish a book called “Trump: Surviving at the Top.”
At the time the book was published, two years after he had bought the famous Plaza Hotel, The New York Times wrote that the improved profits were “still not high enough to cover the interest payments on his bank loans” to buy and upgrade the property. He was also one year away from his first big business bankruptcy.
According to the Times, the Trump Taj Mahal “reported a $25.5 million loss during its first six months of 1990” and his airline hemorrhaged $34.5 million. With $43.5 million in red ink at Trump Castle Casino, he suffered an aggregate loss of at least $103.5 million in 1990 alone. Altogether, Trump’s debt would exceed $3.4 billion, with $832 million accrued with his personal guarantee.
How did everything go so wrong so fast? For one thing, Trump did not have experience in hotel, airline, or casino management. And though he hired executives to help him with these businesses, he often made it difficult for them to succeed.
In 1991, Trump casino executive John R. O’Donnell published a book that described, in excruciating detail, a series of poor decisions that Trump made to undermine his own properties. The Trump Shuttle, for example, lost $128 million in about 18 months.
Trump fell off the Forbes list of the wealthiest people in the world in 1990, but he maintained his high profile, strutting around New York and Palm Beach with his second wife, Marla Maples. In June 1995, he rang the bell at the New York Stock Exchange to announce the start of trading on the day his Trump Hotels and Casino Resorts went public with an initial stock offering. The main asset in the company’s operations was Harrah’s Trump Plaza casino.
Although Wall Street buyers may have acted differently if they had known that Trump was in the process of losing $916 million that very year, they instead invested as if the man could be trusted with their money.
DJT (the man’s initials were used as the ticker symbol) opened at $14. It rose for a brief time to a peak of $35 in 1996 when, not coincidentally, Trump went back on the Forbes list with an estimated fortune of $450 million. That same year saw the public company issue more stock and sold $1.1 billion in junk bonds. It also bought, from Trump himself, the Taj Mahal and Trump Castle Casino, which was renamed Trump Marina.
In an instant, the debt and future liabilities of these gambling halls were shifted from Trump personally to his investors. However, Trump remained in charge of the company.
As he shifted his risk to the public company that he nevertheless continued to control, Trump added to its expenses by requiring it to pay for the pilot of his personal jet and to buy his Trump-branded products. If Trump’s management skills had been sufficient to improve shareholders’ value, the extras he took for himself may have been worth it to them. However, under his leadership the company lost money and the stock experienced an almost-steady decline in value as other gambling stocks rose.
In one particularly bad year, when DJT dropped by 70 percent, Trump took a bonus of $5 million. The public company finally went bankrupt in 2004. When the dust settled, $10,000 invested in the IPO was worth $636.
Having put much of his personal debt on the shoulders of others, and granted himself ample pay for running a public company into the ground, Trump shared a version of his recovery story in the 1997 book “Trump: The Art of the Comeback.”
Nowhere in the text does Trump discuss how to discharge $1.7 billion in debt by shifting it to investors, nor does he reveal the negative income he claimed in the 1995 tax forms published Sunday by The New York Times. However, Trump does spend some ink on the value of pre-nuptial agreements and the way that a complaining wife can deprive an executive of success. “If he doesn’t lose the ballbreaker,” he wrote of one executive, “his career will go nowhere.”
For his part, Trump got to where he was going – a multi-billion-dollar net worth – by staying focused on his own wealth and wreaking havoc in the finances of his investors, bond holders, and everyone who was forced to accept pennies on the dollar because of his corporate bankruptcies. When asked about the damage he has done to others through his business failures, Trump has offered the excuse that he “used the laws of this country, the (bankruptcy) chapter laws, to do a great job for my company, for myself, for my employees, for my family, etc.”
Boiled down to its essence, Trump’s justification for his tax avoidance is raw self-interest. The same force motivated him to seek property tax abatements worth tens of millions of dollars to make projects such as the Grand Hyatt hotel at Grand Central Terminal in New York more profitable.
Trump isn’t the only one who took advantage of the enormous tax advantages enjoyed by the real estate industry, but he may be the only one from the industry who has risked letting the world in on the tax games played by real estate developers.
When he has talked about income taxes, Trump has spoken as if his personal wealth and the well-being of his profit-making companies is the only consideration. Duty to his country, or fairness to citizens who actually pay taxes, doesn’t seem to fit into his way of thinking.
This reality, when added to Trump’s exploitation of investors, vendors and others, tells us that the real “art” that Trump practices is deception. So far, he has used it to convince investors, vendors and admirers that he’s a good business manager despite evidence to the contrary. The presidential campaign is his attempt to complete his ultimate work.