Trump Tax Theory — Effective Insolvency

Photo by Ehud Neuhaus on Unsplash

It’s possible that the reason that Donald Trump doesn’t want anyone to see his taxes is that it would be instantly clear to any and all analysis that he is effectively bankrupt.

Under this theory, he is able to maintain the fiction that he is wealthy only so long as his creditors remain unaware of the true state of his affairs.

This theory does fit the available facts, including:

In this scenario, it’s the last point — the mark-to-market valuation — that is critical. If his contemporary tax returns are released, all of his creditors would be under pressure to analyze his actual portfolio.

Let’s take the (highly doubtful) Forbes data as a starting point. Let’s say that the $3.1 billion is overstated — we’ll use $1.6b instead. And that he actually owes $3.1 billion in loans on the listed assets. It’s pretty easy to start to math out scenarios where he is looking at negative cash flow each month, even with all of these “assets” on his books.

If his tax returns are released, it would make it effectively impossible to recapitalize on his debts as they come due… which would render him insolvent… and the world’s biggest loser.

Writer for WeSIA.com, an Internet Think Tank.

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