What is Trump hiding? That he pays no taxes?

We explored this question earlier this month: Trump refuses to disclose his tax returns . . . what is he hiding?

Drew Harwell at the Washington Post has a partial answer. The last time Trump’s tax returns became public, they showed he didn’t pay a cent:

Screenshot from 2016-05-11 15:01:45The last time information from Donald Trump’s income-tax returns was made public, the bottom line was striking: He had paid the federal government $0 in income taxes.

The disclosure, in a 1981 report by New Jersey gambling regulators, revealed that the wealthy Manhattan investor had for at least two years in the late 1970s taken advantage of a tax-code provision popular with developers that allowed him to report negative income.

Today, as the presumptive Republican presidential nominee, Trump regularly denounces corporate executives for using loopholes and “false deductions” to “get away with murder” when it comes to avoiding taxes.

“They make a fortune. They pay no tax,” Trump said last year on CBS. “It’s ridiculous, okay?”

The contrast highlights a potentially awkward challenge for Trump.

[Trump] has aggressively pursued tax breaks and other government supports to bolster his real estate empire. But that history threatens to collide with his efforts to woo working-class voters who resent that they often pay higher tax rates than the wealthy who benefit from special loopholes.

Trump’s personal taxes are a mystery. He has refused to release any recent returns, meaning the public cannot see how much money he makes, how much he gives to charity and how aggressively he uses deductions, shelters and other tactics to shrink his tax bill.

Trump, who said last week on ABC that his tax rate is “none of your business,” would be the first major-party nominee in 40 years to not release his returns.

In an interview this week, Trump said that he has paid “substantial” taxes but declined to provide specifics.

He reiterated that he fights “very hard to pay as little tax as possible.”

* * *

Trump’s contradictory approaches have been apparent for years.

He criticized 2012 Republican nominee Mitt Romney for delaying the release of his returns. Romney, a former private-equity executive, had come under fire for paying a low tax rate because most of his income came from investments.

“It’s a great thing when you can show that you’ve been successful and that you’ve made a lot of money,” Trump said at the time.

Romney eventually released returns showing that, for his 2011 taxes, he chose not to take certain deductions, bringing his tax rate more in line with that of average Americans.

Trump, early in his campaign, seemed ready to give voters a look at his tax filings.

In January, he said on NBC’s “Meet the Press” that he was ready to disclose his “very big . . . very beautiful” returns.

But as his campaign gained momentum, Trump backed away from his declaration. He first claimed that ongoing audits by the Internal Revenue Service prevent disclosure.

Then last week, he told the Associated Press that voters are not interested in seeing his tax filings and that “there’s nothing to learn from them.”

Trump’s new position has unnerved some tax experts, who see value in the tradition of transparency by presidential contenders.

* * *

Trump’s stance has become an issue in the campaign.

Romney said on Facebook last week that refusing to release tax returns should be “disqualifying” for any nominee and speculated that Trump’s returns could be hiding a “bombshell of unusual size.” Senate Majority Leader Mitch McConnell (R-Ky.) weighed in this week, telling reporters that Trump will “have to make that decision himself” but that presidential candidates’ releasing their returns has “certainly been the pattern for quite some time.”

Trump’s likely Democratic opponent, Hillary Clinton, who has disclosed decades of tax returns, released a 60-second ad last week asking, “What’s Donald Trump hiding?”

“You’ve got to ask yourself: ‘Why doesn’t he want to release it?’ ” Clinton said at a New Jersey rally last week. “Yeah, well, we’re gonna find out.”

Bob McIntyre of the liberal group Citizens for Tax Justice suspects Trump’s tax returns, if made public, would undermine the political image the candidate has crafted of a brilliant businessman with what his campaign has called “tremendous cash flow.”

Trump may be worried that “he’d show very little income on his tax returns compared to his wealth claims,” McIntyre said, adding that Trump’s returns could also show that he “writes off everything he has in his life — the hairdo, the plane — as business expenses.”

Trump has repeatedly said that he would be open to sharing his returns. In 2011, he said he would release them after President Obama released his long-form birth certificate but never did after the certificate’s release. In 2014, he said he would “absolutely” release them “if I decide to run for office.” Last year, he said he would release them when “we find out the true story on Hillary’s emails.”

To back his refusal, Trump has released a letter from his tax attorneys that said his tax returns had been audited by the IRS since 2002, and that audits on the returns since 2009 were still underway.

The attorneys’ letter also said returns from 2002 to 2008 had been closed administratively by the IRS, meaning their audits had been completed. Trump said in an interview that he would still not release those returns because “they’re all linked.”

But experts say that Trump is free to release his tax records. President Richard Nixon released his returns while under audit. Nothing, including an audit, “prevents individuals from sharing their own tax information,” an IRS spokesman said.

The only window into Trump’s handling of his income taxes came during the 1981 New Jersey gambling commission report.

Trump had submitted his 1978 and 1979 returns to the regulators as part of an application for a casino license. State records summarizing the returns show that Trump claimed that his combined income during those two years was negative $3.8 million, allowing him to pay no taxes. A few years earlier, he had told the New York Times he was worth more than $200 million.

Tax analysts say it is possible that Trump pays very low income taxes, or no taxes at all, using tactics available to wealthy investors and developers, such as depreciating the value of real estate.

When asked this week whether he pays income taxes, Trump said, “I will give that to you as soon as I get my audit finished.” He added later, “But with that being said, when you’re in the real estate business, you do have certain tax advantages.”

Trump has benefited from public money by aggressively seeking large tax reductions at developments including Trump Tower.

* * *

Trump has defended his use of public tax assistance to boost private projects. He said opponents of such government supports, including some conservatives, are out of touch with reality.

“The true conservative philosophy is that a thing like that shouldn’t happen. But they’re in the world of the make-believe,” Trump said in an interview. “The real world is that without certain tax abatements, you have a choice. The job could get built . . . or you don’t have to have anything. It could just go stagnant, and a town can die.”

Trump’s strategy to ease his company’s tax burden has resulted in sore feelings in some communities, where local governments rely heavily on tax receipts from large businesses.

In Ossining, N.Y., home to a Trump National Golf Club, town officials say that a tax break being sought by the company would cost their coffers more than $200,000 a year.

In seeking the reduction, Trump’s attorneys have claimed that the club is worth far less than the roughly $15 million value assessed by the city.

Trump’s attorneys have filed papers with the state claiming that the “full market value” of the property is $1.4 million. The same golf course appears on Trump’s new financial disclosure form released this week as part of his presidential campaign — valued by him at more than $50 million.

Well this is a problem. These financial statements are under penalty of perjury that they are true and correct. Trump appears to just pull numbers out of his ass to make himself appear wealthy when it suits him, and then asserts another number when he is is attempting to evade payment of taxes. The media needs to look deeper into these conflicting number. There may be tax fraud and tax evasion involved.

3 responses to “What is Trump hiding? That he pays no taxes?

  1. Tax evasion? That’s quite a charge. I don’t care for Trump much, but I also know that our tax laws have showered tax benefits on those in real estate. In the 1970’s it was entirely commonplace for depreciation deductions and other tax benefits associated with real estate to zero out one’s tax liability.

    Interestingly, this paragraph of yours, which appears to be quoted from another source, was placed in bold:

    “Tax analysts say it is possible that Trump pays very low income taxes, or no taxes at all, using tactics available to wealthy investors and developers, such as depreciating the value of real estate.”

    Tactics? Depreciating the value of real estate is not a tactic, it’s the law. Ultimately, depreciation deductions are recaptured when a property sells. And that is true whether or not the depreciation deductions are actually claimed in the year they’re allowable. So, to imply that Trump claiming depreciation deductions is some sort of tax avoidance tactic is hardly fair. If he didn’t claim the deductions, he’d in the long run wind up paying tax on fictitious income.

    I find the “experts” commenting on Trump’s tax returns rather hilarious. He’s a real estate guy and his activities largely are reflected not on his personal returns, but on the tax returns of business entities, corporations and LLCs, in which he owns the majority but not necessarily the controlling interest. I’ve had a dozen or so conversations about this with other tax professionals, from both sides of the aisle. Not one believes the returns logically should be expected to reveal much.

    • AZ BlueMeanie

      The media is noting disparities between Trump’s campaign finance disclosures and what he claims is his wealth without disclosing his taxes on the specious claim that his taxes are always being audited. Other candidates have disclosed their taxes despite audits. There is the distinct possibility that Trump is either lying on his campaign finance disclosures, or lying on his taxes. The only way to know is to produce the documentary evidence. And my point was that it is the job of the media to pursue this and to find out. If it was Clinton doing this you can be certain that the media would be in full-blown scandal mongering mode even without any evidence.

      • What I have a problem with is the kitchen sink approach being used to attack Trump. What his taxes will show is based largely on speculation, which most tax professionals believe is off base. And his concern about being under audit is plausible. I’m not sure it would be fair to have thousands of left-leaning professionals raising questions about his returns for the IRS to pick up on.

        The problem with the kitchen sink approach is that it backfires. If Trump successfully pushes back against the bogus attack lines, the very valid attack lines become less persuasive. And there are so many really, really good attack lines, what’s the point in rolling the dice on whether some speculative problem with his tax returns turns out real?