Supreme Court refuses Trump effort to block tax return subpoena
The move clears the way for prosecutors in New York to receive eight years of the ex-president’s tax returns and financial records
By JOSH GERSTEIN and KYLE CHENEY
02/22/2021 09:41 AM EST
Updated: 02/22/2021 10:11 AM EST
The Supreme Court has cleared the way for prosecutors in New York City to receive eight years of former President Donald Trump’s tax returns and other financial records as part of an ongoing investigation into possible tax, insurance and bank fraud in Trump’s business empire.
The high court’s decision to turn down Trump’s request for a stay of a grand jury subpoena advances a criminal probe by Manhattan District Attorney Cy Vance Jr. that appears to be one of the most serious of an array of legal threats Trump faces in his post-presidency.
The justices issued no explanation for the denial and no member of the court publicly noted any dissent.
Trump pushed back in a Monday statement, decrying the investigation as “a continuation of the greatest political Witch Hunt in the history of our Country,” while continuing to spout false claims that he had won the election.
“The Tea Party was treated better by the IRS than Donald Trump,” the former president said, an apparent reference to revelations in 2013 that the IRS applied extra scrutiny to conservative groups applying for nonprofit status. “The Supreme Court never should have let this ‘fishing expedition’ happen, but they did. This is something which has never happened to a President before, it is all Democrat-inspired in a totally Democrat location, New York City and State, completely controlled and dominated by a heavily reported enemy of mine, Governor Andrew Cuomo.”
Last July, the justices unanimously rejected Trump’s broad claims that he was absolutely immune from state and local criminal investigations while serving as president. However, the decision allowed Trump to pursue other arguments against a wide-ranging subpoena served on the Trump Organization in August 2019.
A federal appeals court rejected those arguments in October 2020, prompting Trump’s lawyers to make another run at the Supreme Court. An agreement with Vance put the subpoena fight on hold while the justices considered Trump’s request for a stay.
The precise contours of Vance’s investigation remain uncertain, but it appears to be centered on allegations from former Trump lawyer Michael Cohen that the firm manipulated real estate valuations in order to maximize collateral for loans and minimize real estate taxes. Cohen also claimed that Trump committed fraud in dealings with insurance companies. Trump and the Trump Organization have denied the allegations.
Earlier today the Supreme Court ruled that accounting firm Mazars must immediately turn over Donald Trump’s tax returns to the Manhattan District Attorney and his grand jury. Michael Cohen, who has been a key cooperating witness in those grand jury proceedings, appeared on MSNBC this afternoon to discuss the case.
Cohen pointed specifically to the hush money payments to Stormy Daniels as being a legal problem with regard to Trump’s taxes: “What will ultimately show is that Donald Trump with the hush money payments did not declare it, in whatever way you would declare it.”
Cohen also reminded everyone that the Manhattan DA recently decided to seek records on Trump’s real estate properties from the New York Department of Taxation. Cohen previously testified to Congress that Trump liked to falsify the values of his properties in order to fraudulently obtain loans and other similar antics.
Michael Cohen said this about Trump: “He should start maybe speaking to somebody about getting a custom made jumpsuit, because it does not look good for him.” Cohen also stated that the Manhattan DA is also investigating Trump’s kids, Trump Organization CFO Allen Weisselberg, and others.
Three possible explanations for why he only paid $750.OCTOBER 5, 2020
Staff writer at The Atlantic
Explanation 1: Trump’s businesses are doing terribly
One rather literal interpretation of Trump’s tax records is that Trump is a pretty bad businessman, full stop.
Trump is no stranger to losing money. Tax forms obtained by The New York Times showed that, from 1985 to 1994, Trump lost “more money than nearly any other individual American taxpayer.” But his net worth is estimated at $2.5 billion. He’s clearly very rich! So how has a clearly very rich person avoided paying income taxes for the better part of this century?
Explanation 2: Extremely questionable tax maneuvering
Trump claims business deductions like Louis XIV furnished Versailles: lavishly, laughably, with monarchical prerogative. For instance, Trump deducted $70,000 in hairstyling expenses. “The tax law is clear that you don’t get to claim a business deduction for expenses that are fundamentally personal in nature,” said Ari Glogower, a tax-policy professor at the Ohio State University. “It’s the same principle that says you can’t deduct fancy suits just because you work in a nice office.”
More egregious, Trump seems to have paid $700,000 in “consulting fees” to his daughter, Ivanka—a sum he also claimed as a business deduction. “There could be a variety of games going on there,” Glogower said. “It could be about avoiding estate taxes, or avoiding payroll taxes, or avoiding state taxes. We need more facts to know for sure, but shifting income to your family through unearned consulting fees is a classic tax game, which Fred Trump used as well.”
What’s so wrong—or deviously clever—about all that? Well, Trump’s trick, according to Steve Rosenthal of the Tax Policy Center, is all about what he did after the bank wrote down his debt. “So Trump would borrow money from banks, spend it all, and go back to his creditors and find a way to avoid paying the whole loan back,” said Rosenthal. “But when a bank writes off your debt, the discharged debt is income. You have to report it as taxable income. Trump never did.”
Instead, Trump repeatedly ducked his obligations to lenders and the IRS, perfecting the same playbook—borrow, spend, deduct, and walk away. Eventually, American lenders caught on to the gambit and stopped giving him money, forcing him to seek other sources of revenue, such as Deutsche Bank and international plutocrats.
And that’s where, just maybe, things took a criminal turn.
Explanation 3: A mystery only prosecutors can unwind
Starting about 10 years ago, the so-called King of Debt tried something new: spending his own money. He spent up to $400 million buying golf courses, hotels, and wineries. He also took on $400 million in personally guaranteed loans, exposing him to personal bankruptcy in the (very common!) event that he can’t pay back the loans in full.