0


Donald J. Trump during the second presidential debate. Credit Doug Mills/The New York Times
Donald J. Trump explicitly acknowledged for the first time during Sunday’s debate that he used a $916 million loss that he reported on his 1995 income tax returns to avoid paying personal federal income taxes for years.
Mr. Trump’s response — “Of course I do. Of course I do” — was the fullest the wealthy developer had provided since The New York Times reported that he had declared the loss, and that the tax deduction could have been large enough to allow him to avoid federal income taxes for up to 18 years.
Previously he had declined to comment on the documents, issuing a statement that neither challenged nor confirmed the $916 million loss.
Asked directly during the debate if he would say how many years he had avoided paying federal income taxes, Mr. Trump responded, “No.”

But at the same time, he asserted that he paid “hundreds of millions of dollars in taxes,” calling it a “simple” thing. “I pay tax, and I pay federal tax, too,” he said.
Unless Mr. Trump, the Republican presidential nominee, releases his tax records, it is impossible to determine exactly how he has handled his taxes and what he has paid over the years. If he does not make his taxes public, he will be the first major-party presidential candidate in four decades not to do so.
Though the issue has been overshadowed in recent days by a recording of Mr. Trump’s lewd comments about women, his refusal to release his tax returns — and the possibility that he had not paid federal income taxes for years — has emerged as a central issue in the campaign.
During the debate, Mr. Trump appeared to shed some light on his approach to taxes, saying that he knew more about the tax code than any other presidential candidate in history.

“I have a write-off. A lot of it is depreciation, which is a wonderful charge,” he said. “I love depreciation.”
But as Mr. Trump explained his own tax situation, he tried to make the case that his Democratic opponent, Hillary Clinton, was among those responsible for the tax code that enabled him to get benefits.
“She has given it to us,” he said.
Mr. Trump also went on to invoke Mrs. Clinton’s wealthy allies. “Many of her friends took bigger deductions,” he said. “Warren Buffett took a massive deduction.”
Mrs. Clinton, though, contended that Mr. Trump provided an example of what needed to change in the tax code — saying he was among the people who “paid zero in taxes, zero for our vets, zero for our military, zero for health and education. That is wrong.”

She proposed a tax on people who make more than $5 million, calling it the “Buffett rule.”
In Mr. Trump’s case, what is clear is that he derived remarkable tax benefits from the financial ruin he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.
“Simply put, the organization is in dire financial straits,” New Jersey casino regulators concluded after reviewing his business balance sheet woes in 1990.
The 1995 tax documents, which were anonymously mailed to a New York Times reporter, were the first page of a New York State resident income tax return, the first page of a New Jersey nonresident tax return and the first page of a Connecticut nonresident tax return. They did not include any pages from Mr. Trump’s 1995 federal return.
Mr. Trump was correct when he said he benefited from a provision that had been used by other wealthy families.

Known as net operating loss, it allows an array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of people like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income.
With a $916 million net operating loss in 1995, Mr. Trump could have avoided paying more than $50 million a year in taxable income over 18 years.
Mr. Trump appears to have embraced other elements of the tax code.
In 1991, he lobbied federal lawmakers to relax tax rules that he claimed had strangled the real estate industry. And in less than two years, as part of a wide-ranging budget deal, Congress passed a set of provisions sought by developers that could have helped Mr. Trump avoid large tax bills linked to his enormous debt racked up by the early 1990s, while also allowing him to spin other real estate losses into valuable offsets on his future earnings in licensing, television and other ventures.
One provision allowed real estate investors with highly leveraged properties to accept forgiveness of their bank loans without paying taxes on the money, in exchange for giving up other tax benefits. Another allowed them to apply some real estate losses against other kinds of income.
While details of Mr. Trump’s income taxes and any deductions are scarce, limited details are contained in government filings that have been unearthed during his campaign.
For example, Mr. Trump paid more than $71,000 in federal income taxes on about $218,000 of taxable income earned from 1975 to 1977, according to a 1981 report assessing his fitness for a casino license. During the next two years, 1978 and 1979, he paid no taxes, the report said.
Mr. Trump also avoided paying any federal income taxes in 1984, tax court records show. With his Atlantic City casinos in financial trouble in 1991 and 1993, casino commission reports show that he claimed losses that would have allowed him to avoid paying income taxes in those years.
Voters in recent polls have shown interest in Mr. Trump’s taxes. A CBS News/New York Times poll last month showed that 59 percent of respondents said it was necessary for him to release his tax returns.
Mr. Trump has said he will not release his taxes while he is facing an audit from the Internal Revenue Service.
“I pay hundreds of millions of dollars in taxes, but, but as soon as my routine audit is finished I’ll release my returns,” he said. “I’ll be very proud to.”





Post a Comment

 
Top