With the election of business mogul, Donald Trump, to the position of President Elect, the United States concluded one of the most historic and certainly one of the most divisive elections of all time.
This election is going to down in the books for a long time because of the candidates, the circumstances, and all the scrutiny. This election has taught us many things, like how Donald Trump is much smarter than we gave him credit for. That many of us were greatly torn on who to select for president, and the stereotypes that come with voting for Donald Trump.
This article reflects just how ignorant so many voters are about business economics and how that ignorance hurt Donald Trump’s chances in an unfair way with many voters. We’ll begin with bankruptcy.
The greatest necessity that any leader of any organization has to have is an ability to crunch and balance numbers. Whether people liked or disliked Obama, the fact is that under his two terms, the national debt has more than doubled and is in somewhere along 18 trillion bucks. Only the most idiotic spendthrift would not be concerned about the country’s debt being 18 trillion dollars.
Let’s put that into perspective. Say Mark Zuckerberg was to say to Facebook users, ‘I’m going to charge you a dollar a year to use Facebook.’ Say everyone on Facebook agreed. It would take Facebook and it’s billion plus users 18,000 years to make how much money the United States owes.
The debt alone could make any conservative person vote for Trump and since Trump is in fact, a billionaire, the left and his Republican primary opponents, had to poke holes in his image of a successful businessman as part of election strategy. Carly Fiorina, who was unprofessional as one businesswoman to her fellow businessman, started it by twisting the fact that Donald Trump has had four of his companies declare bankruptcy in the last 25 years (1991, 1992, 2005, and 2009).
Now, every person with a high school education or even still in high school should know that bankruptcy is bad. It is the “B word” of the financial district. To clarify, it’s the legal way of discarding debt. It cleans the slate and things can start over. The problem is you essentially stiff your creditors and they don’t get their money.
The thing is that Fiorina and the media took advantage of a lot of people’s lack of understanding that a corporation declaring bankruptcy is not the same as personal bankruptcy, which is infinitely exponentially worse. If say my good friend, Tom McCoppin filed personal bankruptcy, he’d lose his debts, but he’d lose significant things like his house on the lake, possibly his boat and car, and other things depending on the state law in Texas. He’d still keep his dachshund sweetheart Bitsy, but he’d lose his greatest assets (including what’s left of his hair). Because of this, personal bankruptcy is viewed as a last resort.
In the corporate world, this is quite different. In reality, sometimes the best move for a company is to declare bankruptcy or else the creditors can take the actual company. This is not always common knowledge depending on how deep you study economics. I only found out that there were major differences four years ago when I was watching Suits and Harvey Specter was trying to convince a construction CEO to declare bankruptcy or else he’d lose his family’s company. Not the other way around.
Another way corporate bankruptcy differs from regular bankruptcy, is that there is no complete discharge from debt, but rather a significant reduction. Maybe 50 cents on the dollar. Which is significantly less, but still significantly more than the some thought Donald Trump didn’t pay a red cent.
Donald Trump’s four bankruptcies involved three casinos and the Plaza Hotel. The first casino Trump Taj Mahal. In the first bankruptcy, the casino Trump Taj Mahal, the debt was reduced from $900 million to $550 million that he still had to pay off. He sold a private airline he had to help pay off the debt. This was the tough one because he had a lot of his own personal money mixed up in it, but the business mogul learned from that mistake and didn’t put his personal wealth in the form of personal liabilities in the deal anymore.
In the Plaza case, Trump’s file for bankruptcy allowed him to approve a plan that reorganized $550 million in debt. He gave up a 49% stake to Citibank and five other lenders to get easier payment terms. He kept the title of CEO, but did not have a salary and gave up day-to-day operations in the Hotel. Eventually the hotel was sold and the deal included most of the remaining debt being paid off by the buyers. He’s still a minority partner.The other two bankruptcies involved similar circumstances of fluctuating casino business and not enough income to pay off the debt. In the fourth instance, Trump said that besides having his name on the company, he was not involved in the operations.
We have all these inspirational quotes about never quitting even when you fail. Milton Hershey declared bankruptcy multiple times before achieving success with his chocolate company. Henry Ford had a couple of failed automobile businesses. Sir James Dyson went through 5,126 failed prototypes before succeeding at making the bagless vacuum.
Donald Trump’s decisions, when looked at from a business perspective, were smart decisions based on the circumstances he was in. The casino market is unpredictable, he went through some bumps and the Plaza Hotel was another bad situation that he maneuvered out of. The truth is that you can argue that these acts strengthen his credentials for President because Donald Trump took the punches and stayed standing.
To sum it up, the bankruptcy angle meant to discredit Trump’s business prowess was misleading, pure and simple. The second thing that people didn’t want to grasp is that Donald Trump did NOTHING wrong with his taxes.
There was no greater set of documents in demand than Donald Trump’s tax returns. What was a courtesy done by candidates that became a tradition became the million dollar question for Mr. Trump. How many millions of dollars did you spend in taxes this year since you’re a billionaire?
Trump never released his current returns, but there was an uncovering of his 1995 return by the New York Times. The “surprise” was that his 1995 return was released and on it was an incredible $916 million in losses. These losses stemmed from the financial struggles he learned from with the casinos and the Plaza Hotel in the early 90s. All of these were, without getting too complicated, could easily lead to Trump being allowed to avoid paying taxes for up to 18 years. The absence of returns from 1995 on means that it is speculation from here on out as to whether he paid taxes or not.
Donald Trump has been mum on his late tax returns and it does cause an eyebrow raise because how long can an audit take? However, when Clinton said that he could’ve easily avoided taxes in the 70s, he said, “That makes me smart.” And if you’re an unbiased person not thinking of taxes as a patriotic duty or what not, it is actually quite smart.
I can understand why people don’t understand taxes. Tax law is the most unnecessarily complex subject that mankind has ever created with the NFL’s current catch rule a close second. Tax law’s complexity is the reason why tons of guys in suits have jobs as accountants and file people’s returns for them.
The truth is that putting down large losses is common for businessmen, especially investors, because they can put any lost investment money down as a loss. Say I invest $25,000 in a friend’s company and it goes bankrupt, I don’t have to pay taxes on it because I don’t have it anymore. It’s no longer income I have. Trump and his accountant put down the losses from the casinos and they can spread it out to where he doesn’t have to pay taxes. We still don’t know if he didn’t pay taxes to be quite honest. He might have, so the memes spread by Occupy Democrats saying Trump hadn’t paid a cent in taxes were not true or at the very least, not substantiated because it only covered the 1995 return. There is still 20 years left unverified.
A lot of people are not business owners or economics majors, so the lack of knowledge is somewhat excusable. But what is inexcusable is the willful ignorance/hypocrisy that people displayed calling him a tax cheat. Do people really think that Donald Trump wouldn’t be prosecuted for income tax evasion if he did something illegal?
For those of whom the answer is yes, then I ask the same people, do they really believe that Donald Trump can get away with tax fraud but Hillary Clinton is totally innocent in the Benghazi scandal, in the WikiLeaks release of emails showing collusion by the DNC to sabotage Bernie Sanders, or in any of the multiple scandals she’s happened to be involved in?
If you say yes, then I call you a hypocrite to say the very least because there’s enough things to truly believe Hillary Clinton is somewhat guilty and she’s got the liberal press on her side whereas Donald Trump’s tax returns were reported by the left-slanted New York Times and even they say that Trump did nothing illegal. Is what he did right? Depends on how you individually see it.
Is it morally wrong? Is it unpatriotic? Is it disgusting exploitation? Maybe it’s all three, but it’s not illegal. Want to change that, change the tax code, but don’t call people who use the legal system to save their money against them. Many people would argue that taxes are what’s wrong with the world.
Let’s put ourselves in our own pair of shoes that make money. When I was living paycheck to paycheck in Utah, I disliked paying taxes. 30-odd% of my income taken out every two weeks? No sir. I did not like that. I paid my taxes as it was my duty, but I definitely disliked it because that 30% was the difference between walking to the grocery store and driving. Between a night at the bar or a night at home. Between trying to cook a meal for a date versus taking her out.
It wasn’t greed, it was the natural feeling to safeguard what’s mine and what I earned. The government didn’t answer those calls at the call center, and the government didn’t put up with boring or rude callers. The government didn’t read off a script or get yelled at occasionally by outraged people, one a man who got angry simply because I verified the spelling of a long complicated name. Why should the government take my money?
I had to remind myself why taxes exist and I lived with it. But honestly, if there was a way to get the money back or avoid paying it, I would absolutely exploit it and my conscience would say I was a starving college student. If I was making millions, I might do the same thing too because I’d rather spend or donate my money on what I want to see done versus the government taking it and doing with it whatever they want.
The flaw isn’t in Donald Trump as much as it is in our tax code. Change the tax code and then it can’t be done without risk of going to Leavenworth Federal Prison. The grand lesson to learn from all this? Learn some more economics before we start questioning business people.
Credit to Emily Stewart of TheStreet.com for information on Donald Trump’s bankruptcies here.