Amid the ongoing political uproar over Donald Trump's undisclosed tax records, the New York Times dropped a bombshell late Saturday when it reported that, due to a staggering loss of $916 million in 1995, it is possible that the Republican presidential nominee has not payed taxes in nearly two decades.
Times reporter Susanne Craig obtained three pages from Trump's 1995 tax returns—one page of a New Jersey nonresident return, one page of a Connecticut nonresident return, and a New York State resident income tax return—by way of an anonymous mailing, with a return address listed as Trump Tower.
The documents, verified by Trump's then-accountant Jack Mitnick, report a loss of $915,729,293 for that year. Tax experts hired by the Times confirmed that "tax rules that are especially advantageous to wealthy filers would have allowed Mr. Trump to use his $916 million loss to cancel out an equivalent amount of taxable income over an 18-year period."
According to the paper:
The provision, known as "net operating loss," or "N.O.L.," allows a dizzying 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 men like Mr. Trump. In turn, those losses can then be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.
Better still, if the losses are big enough, they can cancel out taxable income earned in other years. Under I.R.S. rules in 1995, net operating losses could be used to wipe out taxable income earned in the three years before and the 15 years after the loss.
And while the real estate mogul's income in subsequent years remains unknown, such a loss in 1995 "would have been large enough to wipe out more than $50 million a year in taxable income over 18 years," the Times reported.
Although the financial manipulations were not illegal, as the Times noted, the records "reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived from the financial wreckage 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."
The rebuke was swift. Brian Fallon, press secretary for Trump's rival, Democratic nominee Hillary Clinton, immediately tweeted:
BOMBSHELL: Trump's returns show just how lousy a businessman he is AND how long he may have avoided paying any taxeshttps://t.co/M4SGm7eKRL
— Brian Fallon (@brianefallon) October 2, 2016
Others followed suit, condemning a tax code built for the wealthy as much as they condemned the nominee:
Middle class families pay their taxes. But billionaires like Mr. Trump don't have to thanks to their friends in Congress.
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— Bernie Sanders (@BernieSanders) October 2, 2016
Good reminder tax code sucks & benefits the wealthy & Trump is a shitty businessman whose crap career was resurrected by NBC's Apprentice
— Lee Fang (@lhfang) October 2, 2016
If Trump goes on a new racist/sexist rant in the next 18 hours it'll be because he doesn't want to talk about this. https://t.co/BDdnG7Asmt
— Zeddonymous (@ZeddRebel) October 2, 2016
with each new revelation I'm reminded that every sleazy thing Trump does thats legal is far more an indictment on the capitalism than Trump.
— Adam H. Johnson (@adamjohnsonNYC) October 2, 2016
Indeed, Trump's refusal to release his tax records has become a major flash point in an increasingly tense presidential contest. Claiming that he cannot release the documents because he is currently being audited, the Republican nominee has broken decades of precedent, beginning with President Ronald Reagan in 1980.
During last week's debate, Clinton pointed to an instance in the 1970s when Trump was forced to disclose that he had paid no federal income tax for several years, Trump quipped in return: "That makes me smart."
"There it is," Clinton campaign manager Robby Mook said in response to Saturday's report, "This bombshell report reveals the colossal nature of Donald Trump's past business failures and just how long he may have avoided paying any federal income taxes whatsoever. In one year, Donald Trump lost nearly a billion dollars. A billion. He stiffed small businesses, laid off workers, and walked away from hardworking communities. And how did it work out for him? He apparently got to avoid paying taxes formerly two decades—while tens of millions of working families paid theirs. He calls that 'smart.' Now that the gig is up, why doesn't he go ahead and release his returns to show us all how 'smart' he really is?"
Trump's campaign sent the Times a statement defending the nominee's record. It read in part:
Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required...That being said, Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes, and federal taxes.
But as one observer noted on Twitter, one key word was missing:
Prominently missing word from the list of types of taxes Trump pays:
— M.S. Bellows, Jr. (@msbellows) October 2, 2016