The incredulous March 14, 2016 headline from The New York Times read: “Trump Wrote Off $100 Million in Losses in 2005, Leaked Forms Show.” Only in the press could one look at President Trump’s leaked first two pages of his 2005 federal income tax return and create this headline.
A cursory review of President Trump’s 2005 tax return reveals that he paid $38 million in federal taxes when filing his 2005 federal income tax return and it is safe to estimate based on the released information that he paid at least another $9 to $12 million in state income taxes. Equally astounding is that these two pages of his 2005 tax return essentially reveal that he reported adjusted gross income to the Internal Revenue Service of around $900 million between 1996 and 2005.
The story is not that he deducted his legally allowed (and arguably mandated) $100 million dollars of net operating loss carryovers from before 1995. The story is that between 1995 and 2005, President Trump rebounded financially at levels that are the stuff of legend. The story is that he paid around $50 million dollars in federal and state income taxes in a single year.
While the data is not reasonably comparable, President Trump’s 2005 tax return makes Warren Buffet’s 2015 federal tax payments of $1.8 million appear inconsequential and unreasonably tiny relative to Mr. Buffet’s net worth. Let us recall that Mr. Buffet was trying to make a political point when he released his 2015 tax returns.
On October 16, 2016, I wrote for Townhall.com: “Mr. Trump’s use of his net operating loss carryforwards was not only lawful, but exactly the way the Internal Revenue Code was designed. The individual who has losses in one year and income in the next should be able to offset the old losses against the new income. When the taxpayer gets ahead, more income than previous losses, he should pay income taxes. The reality is that Mr. Trump did absolutely nothing special by using his losses from prior years against current income as provided for in the Internal Revenue Code.”
In that same October 16, 2016 piece, again based on his released 1995 tax return: “My predictions were pretty much spot on: big losses creating net operating loss carryovers for tax purposes offsetting any or most income earned since 1995, probably paid some alternative minimum taxes.”
While President Trump would violently disagree in a discussion about the appropriateness of some form of alternative minimum tax, his tax return for 2005 demonstrates that the man paid multiples of income taxes more than virtually anyone speculated. It also demonstrates that Mr. Trump was incredibly successful for the decade after his failures in Atlantic City. That is the story, the only story on Trump’s taxes based on the 2005 partial tax return release.
Why President Trump will not release his tax returns remains a mystery. But wow, $50 million of taxes in a single year, that should get WOW status, not some headline that focuses on a perfectly legal tax deduction resulting from losses a decade previous.