God bless the New York Times. The journalists at the paper found the amount of business losses that Republican presidential nominee Donald Trump declared on his 1995 federal income tax return.
Rake In $916 Million, Pay Tax On $0?
Trump claimed losses of nearly $916 million—$915, 729,293, to be exact. The Times reports that the likely result is that Trump would have paid no federal income taxes on that amount. And he could have spread the savings for three years back and 15 years forward: from 1992 through 2010. The reason is that the tax laws in 1995 gave very favorable treatment to losses from operating a business. They are called
“net operating losses.”
When a taxpayer operates a business and loses money, the law allowed the loss to wipe out the tax liability for that year. And, when the loss was very large, the taxpayer could carry the losses forward. In other words, the taxpayer could apply the loss from one year against the taxes on the income from the following year. This means that Trump could have used that same process to cut his federal income taxes to zero every year through 2010 until the loss was used up.
He also would have been permitted to carry back the losses for three years. In other words, he could apply the losses to get back taxes he had already paid by amending his returns.
What We Don’t Know
We don’t know what other deductions Trump might have claimed for, say, charitable donations or property taxes, to cut his taxes even more. We don’t know whether he actually used the loss to avoid paying unnecessary taxes in 1996 or later. We don’t know what his earnings, profits, or losses were for any of those years. The only way to know that is to review the actual returns from those years.
But we do know that he considers it a point of pride and principle not to pay any more in taxes than the law requires.
Effects Of Loss On Others
As the Times reported, many contractors weren’t paid. Architects, suppliers, other construction professionals, all were stiffed. The holders of the construction bonds to build his casinos got pennies on the dollar. Here’s a detailed story from a small business owner who supplied pianos to Trump’s casinos.
Image is a YouTube screengrab.
