Trump’s Pardons Of Tax Cheats Erode Confidence In The Tax System

President Trump has pardoned at least five well-connected people who either plead guilty or were convicted of tax fraud and other crimes. His clear message: If you have political influence, cheating on your income tax is perfectly acceptable.

That message is likely to further erode public confidence in the income tax system and increase public perceptions that the wealthy don’t pay their fair share of taxes. And the pardons are likely to further lower morale at the IRS and the Justice Department, where investigators and attorneys worked for years to prosecute these cases of tax fraud.

Trump’s pardons came just months after he called former President Joe Biden’s pardon of his son Hunter for tax fraud “an abuse” and a “miscarriage of justice.”

Trump And The IRS

Trump’s own relationship with the tax system has been frought. In his 2016 campaign, he said avoiding taxes “makes me smart.” While Trump’s real estate dealings aggressively pushed the limits of permissible tax avoidance, the IRS never accused him of violating the law.

In his second term as president, Trump plans to slash the IRS staff by 40 percent, including a “high” level of cuts in its compliance staff. At the same time, Congress has eliminated all the agency’s enforcement funding increases that were included in the 2022 Inflation Reduction Act. All these steps will limit the agency’s ability to stop tax cheats.

The IRS has had five commissioners since Trump took office. He has nominated former congressman Billy Long to take the post permanently. Long has called for abolishing both the income tax and the IRS, and has made a living in recent years promoting tax shelters and a covid-era tax credit the IRS has warned could be “scams.”

The Pardons

Now, Trump has pardoned:

• Former New York Republican congressman Michael Grimm, who pleaded guilty to tax fraud in 2014. Grimm underreported $900,000 in income from his New York restaurant and used some of the money to pay employees off the books, which allowed his business to avoid paying its share of payroll taxes.
• Reality TV stars Julie and Todd Chrisley, who were convicted of bank fraud and tax evasion. A jury found they defrauded banks out of $36 million and failed to file tax returns or pay any federal income taxes from 2013-2016. Their accountant filed two false corporate tax returns, claiming one of the couple’s firms earned no money in 2015 and 2016. The Chrisley’s daughter Savannah endorsed Trump in a speech at last summer’s Republican National Convention.
• Florida businessman Paul Walczak pleaded guilty to failing to pay more than $10 million in federal taxes. His fraud included withholding but not remitting to the government more than $7.4 million in employee payroll taxes and failing to pay more than $3.4 million in employer Social Security and Medicare taxes. He also stopped filing any personal income taxes starting in 2018. Walczak’s mother, Elizabeth Fago, is a political fundraiser for Trump. The New York Times reported that two weeks before her son’s pardon, Fago attended a $1 million-a-person fundraiser at Mar-a-Lago.
• Former Arkansas state senator Jeremy Hutchinson, who pleaded guilty to crimes of bribery and tax fraud, including filing false federal income tax returns from 2011 to 2014. As part of his plea, he admitted he stole over $10,000 in state campaign funds and failed to report $20,000-a-month-payments he received from law firms and others. Hutchinson is the son of former GOP US Senator Tim Hutchinson and nephew of former Arkansas Republican Governor Asa Hutchinson.

During Biden Administration, Trump was an aggressive critic of Biden’s son Hunter, who pleaded guilty in 2024 of failing to pay more than $1.4 million in income taxes.

One big difference between the Biden cases and the Trump pardons: Criminal tax charges typically are brought against those who also commit other major crimes, such as the Chrisley’s bank fraud and Hutchinson’s bribery, or in cases where employers steal payroll taxes from workers, as Walczak did.

By contrast, it is rare for the government to charge criminal tax fraud that is unrelated to another major crime, as in Hunter Biden’s case. Biden also was convicted of failing to disclose that he was a drug user when he applied for a handgun license.

Impact On Attitudes

The question now: What impact will Trump’s pardons, combined with his other words and actions, have on public attitudes towards the income tax system?

In April, Gallup found that about 58 percent of those surveyed felt high income people pay too little in taxes. That percentage is up from 54 percent last year, but much lower than the more than 75 percent who felt that way 30 years ago.

In a 2021 study, Harvard economist Stefanie Stantcheva found that about 80 percent of those she surveyed believed that high-income people were more likely to cheat on their taxes than others.

In her 2017 book, Why Americans Are Proud To Pay Taxes, my Tax Policy Center colleague Vanessa Williamson showed that most Americans believed paying taxes is a civic duty and a moral obligation. But they feared that others did not share those views.

Those studies suggest Americans are highly sensitive to tax avoidance by high-income people. How will Trump’s pardons of wealthy, influential tax evaders change public attitudes about the tax system? We may soon find out.