The New York Times seems to think it is a scandal that tax losses were reported by Donald Trump when he was running a major real estate development company during an epic real estate crash. The Times claims that it legally obtained from unidentified sources "printouts from Mr. Trump's official Internal Revenue Service tax transcripts, with the figures from his federal tax form, the 1040, for the years 1985 to 1994."

The numbers show that in 1985, Mr. Trump reported losses of $46.1 million from his core businesses — largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totaling $1.17 billion in losses for the decade.

As anyone even vaguely familiar with business knows, non-cash expenses such a depreciation are wonderful things for the investor. They shelter actual cash income from taxation. President trump pointed this out a couple of hours ago:

Real estate developers in the 1980’s & 1990’s, more than 30 years ago, were entitled to massive write offs and depreciation which would, if one was actively building, show losses and tax losses in almost all cases. Much was non monetary. Sometimes considered “tax shelter,” ...... — Donald J. Trump (@realDonaldTrump) May 8, 2019

....you would get it by building, or even buying. You always wanted to show losses for tax purposes....almost all real estate developers did - and often re-negotiate with banks, it was sport. Additionally, the very old information put out is a highly inaccurate Fake News hit job! — Donald J. Trump (@realDonaldTrump) May 8, 2019

The Times claims that "depreciation cannot account for the hundreds of millions of dollars in losses Mr. Trump declared on his taxes."

Enter the concept of risk — something socialists do not understand. All business investments have risk associated with them. This is why successful investments pay off richly, and it is not a bad thing. Those who invest in many projects inevitably have some that do not succeed and lose money. If they are good enough, though, the successful projects can carry the unsuccessful ones. (See the career of Harvey Weinstein for many examples.) In real estate, a business with a high upfront investment and a market that fluctuates, risks are particularly acute. The key to long-term success is the ability to ride out the downturns and survive to prosper in the good times.

Donald Trump wrote about this in his 1997 book, The Art of the Comeback.



Via Amazon.com.

It is a cliché among successful entrepreneurs that their failures can be more valuable than their successes because of the learning and inner strength that they bring. The United States economy itself is a story of failures (the eight years of low economic growth, rising food stamp rolls, and shrinking labor force during the Obama presidency come to mind) followed by rebounds stronger than ever.

I suppose the Times wants us to believe that Trump was a bad businessman. Perhaps they think he should never have made risky investments, or that only a 100% success record is acceptable.

But, of course, the New York Times Company has made some spectacularly bad investments — the purchase of the Boston Globe for over a billion dollars and the subsequent sale of it for a token amount comes to mind.

The Times managed to survive, and so did Trump's business empire. The Times had to sell off its business jet, but Trump went from a 727 to a 757.

Another day, another attempt to fabricate a scandal.