CLINTON: “Or maybe he doesn't want the American people, all of you watching tonight, to know that he's paid nothing in federal taxes, because the only years that anybody's ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license, and they showed he didn't pay any federal income tax.”
TRUMP: “That makes me smart.”
And despite all of the rhetoric and all the excuses, this is the problem. Not paying taxes may be smart in business, but it is a disaster in politics.
Mr. Trump needs to disclose all of his tax returns or the key elements therefrom today. Otherwise, the next few weeks will play out as the drip drip drip of the faucet while Hillary speculates on what is or is not in his tax returns. He may have been smart to pay little or nothing in taxes, but not stepping to the table with his tax returns is a disaster. Whatever is in those tax returns cannot be worse than the speculation.
Mr. Trump likely has the vexing problem of either (a) he truly lost money on his business operations and therefore paid no income taxes or (b) he has used the vagaries of the Internal Revenue Code in an effort to pay no federal income taxes. The first answer that he lost millions on his investments and therefore paid no federal income taxes undoes his argument that he is a great businessman. The second answer that he created transactions to avoid federal income taxes may, in fact, make him smart, but it does nothing to garner votes from millions of Americans that cannot structure their lives so as not to pay taxes.
Of course, there is a third possibility; Mr. Trump has gamed Hillary and everyone else. That possibility would be that his October surprise will be releasing tax returns that show Mr. Trump paid a small fortune in taxes and made tens of millions of dollars in contributions over the past decade. If that turns out to be the case, Mr. Trump would be hailed as the political genius of the century.
The excuses for not releasing his tax returns are laughable. His lawyers do not want to release his tax returns because he is under a routine audit. Of course, the question would be: why? Americans sign tax returns under penalties of perjury that their tax returns are true, accurate and complete. It is probable that those same lawyers do not want Trump to ever release the tax returns because of all of the information that would be divulged and that information would be best kept confidential for business purposes. (Of interest, despite some commentary in the press, it is highly unlikely that his tax returns identify a single lender by name. That would be a very unusual disclosure, one not required in most tax returns.)
Trump’s son has indicated both that releasing the tax returns would be a distraction at this point in the election and Americans would not understand them. Big oops.
The reality is that most reasonable observers would be perfectly comfortable if Mr. Trump released only the first two pages of his tax returns along with the schedules labeled by letter and the forms labeled by number. In those few pages, which in a mega return like Mr. Trump’s tax return, is the summary story worth reading. Those pages would provide a great summary of his tax returns without 12,000 pages of detail that would be comprehensible only to a very few tax lawyers and accountants.
If the lawyers continue to object, Mr. Trump could further limit his transparency to the following information that could be presented in a one page memorandum covering his last five tax returns and validated as accurate by an outside accountant.
Mr. Trump’s tax returns memorandum could provide Americans with some transparency from his last five tax returns: From pages one and two of Form 1040: What appeared in his tax returns for: total income, other income, alimony, itemized deductions, tax and alternative minimum tax? From Form 6251, what was on line 10 which shows if Mr. Trump has a net operating loss carryover from previous years’ business losses? Schedule A: how much were his charitable contributions?
The above are the key general questions. Yes, some people would object to the failure to release everything, but the discussion of what was not released would be drowned out by the information released.
The mistake of not releasing the tax returns a year ago is not subject to repair. The question for Mr. Trump is whether he is better served by releasing his tax returns or allowing Hillary to pick him apart with speculation for the next few weeks. It has to be easier to defend truth rather than defend speculation without providing the truth.