Donald Trump is right. The system is "rigged" — for people like him.
Asked in 1934 why he had appointed Joseph P. Kennedy — who made much of his vast fortune through swashbuckling stock market speculation — to head the newly established Securities and Exchange Commission, President Franklin D. Roosevelt is said to have quipped that he had to "set a thief to catch a thief."
Eighty two years later, Donald Trump is mounting his improbable campaign for the presidency on much the same principle.
Sure, the real estate magnate — who maintains five personal residences, claims a personal net worth of $10 billion and regularly boasts of his opulent lifestyle — may not have paid federal income taxes for 18 years. But the populist tycoon assures Americans that his insider's perspective on a system "rigged" in favor of the political and economic elite perfectly positions him to to upend it.
"Nobody knows the system better than me, which is why I alone can fix it," as Trump put it in his address before the Republican National Convention in July. "I have seen firsthand how the system is rigged against our citizens."
"Nobody knows the system better than me, which is why I alone can fix it."
Following the New York Times' disclosure late Saturday night that a $916 million loss Trump claimed on his 1995 tax returns could have been enough to allow him to avoid federal income taxes for as long as 18 years, his campaign doubled down on that message.
"Mr. Trump knows the tax code far better than anyone who has ever run for President and he is the only one that knows how to fix it," the campaign said in an official statement. Notably, the statement did not deny the Times' findings but did seem to nod toward Americans' frustration with a tax regime in which the wealthy have no shortage of tools at their disposal — from perfectly legal offshoring techniques to the development of family trusts and shell companies — to minimize their tax burden.
The problem: But Trump's refusal to release his tax returns — unprecedented in modern presidential campaigns — and the tax policy proposals he's rolled out during his White House bid cast significant doubt on his preferred narrative, instead playing into Democratic nominee Hillary Clinton's depiction of Trump as a populist of convenience who is conning his working class supporters the same way he did Trump University enrollees.
If Trump wants to credibly present himself to voters as a tribune of the common man, he owes voters a fuller accounting of how much he's benefited from the political and economic system he excoriates on the campaign trail, particularly given his sharp jabs at Clinton's own wealth and connections.
Donald Trump is right. The system is "rigged" — for people like him.
Donald Trump appears with his son Barron and wife Melania at his Mar-a-Lago estate, one of five residences he maintains.Source: Gustavo Caballero/Getty Images
Instead, Trump's son Donald Jr. has suggested that his father is withholding his tax returns from the public because releasing them would open the Republican nominee's finances to scrutiny from "every person in the country."
What other deductions and loopholes has Trump taken advantage of to avoid paying taxes while others — including millions of the undocumented immigrants he vows to deport — have paid theirs? We may never know.
How would Trump "fix it?" The candidate's lack of transparency on his taxes may fuel perceptions of slipperiness and disingenuousness on his part — but Trump has long promised to rebalance the nation's tax system, even if he hasn't come clean about how much he's gained from it.
"I know a lot of bad people in this country that are making a hell of a lot of money and not paying taxes. And the tax law is totally screwed up," he told Time magazine in August 2015, specifically citing hedge fund managers.
But Trump's tax proposals wouldn't actually remedy the woes he decries. As Bloomberg noted in May, he advocates a 15% tax rate for those who derive their income from business partnerships, meaning many hedge fund and other investment managers would see their taxes come down substantially, from a current rate of 23.8%.
"He'd be doing me a favor," hedge funder Scott Fearon told Bloomberg. "He'd be cutting my taxes quite a bit."
Moreover, Trump calls for slashing the top federal income tax rate from 39.6% — a rate that kicks in at $415,050 in income for an individual or $466,950 in income for a married couple — to 25%, and champions abolishing the estate tax, which hits only those with assets of at least $5.45 million when they die.
Late last month, the Center for Tax Justice calculated that the poorest 20% of Americans would save an average of $200 per year under Trump's tax plan, while the richest 1% would rake in an additional $88,410 on average.
Another yuge beneficiary of Trump's tax policies? Donald J. Trump himself.
The Washington Post pointed out in August that Trump would slash the rate of taxation on "pass-through" concerns — which include many businesses both large and small — from 40% to 15%. Pass-throughs don't actually pay taxes as businesses, the Post explained; instead, owners of a pass-through pay tax on their share of its yearly profit. Trump owns a stake in more than 200 limited liability corporations, a type of pass-through, the Post noted.
Donald Trump is right. The system is "rigged" — for people like him.
Donald Trump holds a press conference to discuss his tax proposals at Trump Tower in September 2015.Source: Andrew Burton/Getty Images
What's more, the centrist think tank Third Way points out that abolishing the federal estate tax would allow Trump's heirs to score a windfall of up to $7.1 billion, assuming Trump is indeed worth $10 billion, as he asserts.
The bottom line: Though the Times report reveals no illegal conduct on Trump's part — and simply provided solid evidence for longstanding speculation that Trump had avoided federal taxes for years — that's not to say it won't do real damage to his campaign.
Given that 61% of Americans told Gallup in April that they didn't believe the wealthy paid their fair share in taxes, a news cycle revolving around a braggadocious billionaire potentially paying no federal taxes for nearly 20 years is hardly an ideal one for the Trump campaign.
The story could also intensify scrutiny of Trump's decision not to release his tax returns. And though it won't damage Trump with his most fervent and loyal supporters, it will leave millions of voters who aren't committed supporters but may be attracted to his anti-establishment message asking how, precisely, he would rectify a system Trump himself says is unjust.
As The Donald might say: "Not good!"
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