For months, Republican presidential nominee Donald Trump has held off on releasing his tax returns, citing a routine audit as the reason for withholding the documents. But when the New York Times reported that the New York businessman declared a nearly $1 billion loss, the GOP nominee finally admitted to what many voters had already assumed: he paid nothing in federal income taxes for years.
The New York Times report revealed that Trump used a $916 billion loss on his income tax return in 1995, a large enough loss to allow him to avoid having to pay personal federal income taxes for up to 18 years.
After the report initially surfaced, Trump refused to comment on the story, and his campaign issued a statement that neither confirmed nor denied the loss. At Sunday’s presidential debate, the GOP nominee finally acknowledged the loss – but not before saying “no” he didn’t take the loss to avoid taxes and claiming to pay “hundreds of millions of dollars in taxes.”
“Until Trump releases his tax returns, everything is mere speculation. We won’t know how he handled his taxes or what he has paid until he releases his returns to the public,” said a spokesman for Damasco & Associates, an accounting firm.
When pressed on the issue at the debate, Trump turned the situation around, blaming Hillary Clinton and lawmakers for allowing him and others like him to take similar losses.
Tax experts say Trump’s nearly $1 billion loss is highly unusual, and few people can claim a loss of that size.
To his credit, Trump was correct in saying that other wealthy families benefit from the provision he used in his 1995 tax return. Referred to as an operating loss, the provision allows for a variety of deductions, real estate depreciation, business expenses, losses from asset sales and operating losses to carry over to an individual’s personal tax return. Those losses can then be used to cancel out an equal amount of taxable income.
With a $916 million loss, Trump may have avoided paying over $50 million a year in taxable income for 18 years.
Trump may also have benefited from other provisions in the tax code, some of which may have helped him avoid paying taxes on an enormous amount of debt he accumulated in the 1990s.
Few details have been revealed about Trump’s tax returns aside from the limited information found in government filings. Between 1975 and 1977, he paid $71,000 on $218,000 in taxable income, but paid no taxes for the following two years. Tax court records also show that he avoided paying taxes in 1984.
A recent CBS News/New York Times poll showed that voters are concerned about Trump’s taxes, with 59% saying it was necessary for him to release his returns.
Trump still maintains that he will release his returns after the routine audit is complete. “I’ll be very proud to,” he said at Sunday’s debate. The IRS has stated that it is okay to release tax returns while they are under audit.
