Well, it dropped. The first of possibly many October surprises this cycle. Wikileaks’ Julian Assange has already offered teasers about new information he’s obtained about Hillary Clinton that has yet to be released. For now, it’s a brief glimpse into Donald Trump’s financial records that The New York Times says could've legally allowed the billionaire to avoid paying taxes for almost two decades. It’s a 1995 return that the news publication obtained, which showed that Trump had lost almost a billion dollars. The Times contacted a former lawyer and accountant to Trump, who said that the return was “legit,” while also detailing that the massive losses were probably associated with his casino interests that were bleeding cash in the 1990s. Again, there’s nothing illegal in these documents:
Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by The New York Times show.
The 1995 tax records, never before disclosed, 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 tax experts consulted by The Times said nothing in the 1995 documents suggested any wrongdoing by Mr. Trump, even if the extraordinary size of the loss he declared would have probably attracted extra scrutiny from I.R.S. examiners.
On Wednesday, The Times presented the tax documents to Jack Mitnick, a lawyer and certified public accountant who handled Mr. Trump’s tax matters for more than 30 years, until 1996. Mr. Mitnick was listed as the preparer on the New Jersey tax form.
Mr. Mitnick, 80, now semiretired and living in Florida, said that while he no longer had access to Mr. Trump’s original returns, the documents appeared to be authentic copies of portions of Mr. Trump’s 1995 tax returns. Mr. Mitnick said the signature on the tax preparer line of the New Jersey tax form was his, and he readily explained an obvious anomaly in the way especially large numbers appeared on the New York tax document.
The tax documents also do not shed any light on Mr. Trump’s claimed net worth of about $2 billion at that time. This is because the complex calculations of business deductions that produced a tax loss of $916 million are a separate matter from how Mr. Trump valued his assets, the tax experts said.
Nor does the $916 million loss suggest that Mr. Trump was insolvent or effectively bankrupt in 1995. The cash flow generated by his various businesses that year was more than enough to service his various debts.
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 be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.
The publication then details how the Trump Taj Mahal, Castle, and Shuttle ventures were running into the red by the tens of million months into operation. Still, the paper admitted that it does not offer a full financial profile, namely how much the billionaire donated to charity. In the end, these three pages show what other wealthy families usually do with their money, or as The Times put it—keeping “their wealth inside byzantine networks of partnerships, limited liability companies and S corporations,” and using the tax statute to maximum effect. Is this illegal? No. Does it drive liberals insane? Oh, it most certainly does.
Before the class warfare talking points are lobbed, let's reiterate these simple truths about taxes in America: 1) America’s tax code is ridiculous (70,000+ pages); 2) it’s bound to help the wealthy since they have the resources to hire armies of lawyers to find these provisions by combing through the laws; 3) Congress has done next to nothing in recent memory to simplify the tax code; 4) a lot of these wealthy families who are exploiting this tax provision support Democrats, their friends in government, or might be fellow party members themselves. So, let’s get that out of the way before the holier than thou talk from the Left begins. As George Will has said frequently, big government will always benefit the wealthy and powerful as they have the resources to find cracks and crevices (i.e. loopholes) to exploit in order to thrive and prosper.
Yet, there are also some serious questions about Trump’s business acumen with this return. The man nearly lost a billion dollars; where was that from? Was this solely from his casino ventures?
It’s not as bad as lying about a private, unauthorized, and unsecure email server, where state secrets passed through certain communications, or possibly engaging in quid pro quo transactions at a massive nonprofit that so happens to facilitate economically lucrative deals and events that benefit its big donor base. An example would be governments giving millions of dollars to a certain family foundation, and a family member who is part of that nonprofit, while also serving as the United States’ secretary of state, doling out billions in arms deals to those countries.
Trump’s 1995 tax return does show that he possibly avoided taxes for almost 20 years, but it’s legal. At the same time, he’s going to have to explain the $916 million loss, which has now made some of his past tweets about taxes seem hypocritical and awkward. This is something that will definitely be used against him during the next debate. His answer on this will be a good gauge as to how seriously he takes debate preparation, which seemed to be lacking in the first bout last Monday night. Nevertheless, he didn’t totally fall off the cliff in what amounted to a draw (in my opinion) between Trump and Clinton. The man hates to lose, which had me leaning towards betting that he had undergone a good debate preparation; he certainly has the resources to do so. Yet, he missed opportunities to attack Clinton more on her emails, Benghazi, and the Clinton Foundation. The latter two completely escaped scrutiny.
Trump says he will go after the power couple over Bill’s extramarital escapades. I think this is a mistake. Benghazi, the Clinton Foundation, and the emails are not only effective, they’re gender-neutral attacks. If Trump wants to kill any last chance of outreach to female voters, bringing up Bill is the way to do it. Oh, and he’ll also further consolidate the women’s vote around Clinton, which is so far keeping him from rising in the polls, despite his historic numbers with white working class voters, especially men.
I hope he can explain this $916 million loss in the next showdown. It could be the point of the lance in Clinton’s attacks against him.