Senate Democrats circulating memo alleging Bessent tax dodges

Senate Democrats are circulating a memo claiming that President-elect Donald Trump’s nominee for Treasury secretary, Scott Bessent, improperly claimed nearly $2 million in tax losses and owes nearly $1 million in taxes related to his hedge fund — providing ready ammunition for them as Bessent goes before the Finance Committee on Thursday.

The memo obtained by POLITICO, which was prepared by Finance Committee staff under ranking member Ron Wyden (D-Ore.), alleges Bessent should have paid $910,182 in taxes for income he made through his hedge fund, the Key Square Group, from 2021 through 2023. Bessent was able to avoid that income because he claimed he was a “limited partner” not making decisions for Key Square, the memo says.

Democratic staff on the Finance Committee are arguing that Bessent was clearly actively engaged in decisions for the fund.

The memo also highlights losses Bessent claimed from income related to All Seasons Press, a conservative book publishing house that has minted books from authors including former Trump aide Peter Navarro, as well as a glowing biography of conservative pundit Tucker Carlson. The memo argues that Bessent didn’t properly substantiate $1,939,296 in losses, citing ASP records indicating that Bessent wasn’t actively involved in the publishing house’s businesses.

A spokesperson for the Trump transition called the claims "meritless."

"Scott Bessent has paid his taxes. After providing thousands of pages of records through an exhaustive process, neither Senator Wyden nor his staff are able to provide any evidence that Scott violated the Internal Revenue Code," the spokesperson said.

"Instead, they have resorted to a subjective interpretation of the tax code, including taking positions that are contrary to the to the views of the broad majority of tax professionals, accountants and lawyers, in an effort to mislead the public. "

The memo is sure to tee up a barrage of questions from Finance Committee Democrats about Bessent’s taxes at his nomination hearing Thursday. And the memo will allow Wyden to portray Bessent as out of touch with the Treasury Department and IRS that he would lead, which under President Joe Biden's administration have been laser-focused on closing tax dodges used by the ultra-wealthy.

It’s unlikely, though, to put a dent in his support from Republicans, who have quickly coalesced behind the longtime hedge fund manager, or endanger Bessent’s ultimate path to confirmation — especially with Senate Finance Chair Mike Crapo (R-Idaho) pledging to move his nomination quickly.

"Mr. Bessent has followed the law and provided thousands of pages of documentation as part of the committee's rigorous vetting process," said Mandi Critchfield, Crapo's spokesperson, in response to the memo.

In addition to potential problems with his hedge fund income and his ASP investment, the memo also called out a $500,000 deduction Bessent took on his 2023 returns for “bad debt." The memo argues Bessent provided scant explanation to prove the deduction wasn't in fact a gift or a personal loan.

Democratic staff are also pointing out that Bessent likely used a work-around to circumvent a $10,000 cap on state and local tax deductions, claiming $40,000 in such write-offs for a cooperative he had an investment in.

In several of the instances, Democratic staff suggested that Bessent amend his tax returns, but he declined to do so, according to the memo. In one case, Bessent said he would consider amending his returns if tax law verdicts relevant to his “limited partnership” status in his hedge fund were brought before higher courts.

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