Donald Trump is the first presidential candidate since Richard Nixon to refuse to release his tax returns. Because there is no law which can compel Trump to release his returns, we can only speculate about how much he pays.
To figure out what Trump might be paying in taxes, the New York Times recently interviewed several tax experts and advisers, including Steven M. Rosenthal, a veteran tax lawyer and senior fellow at the Urban-Brookings Tax Policy center. Rosenthal said, “I would expect he’s paying little or no tax.”
Many other sources seem to confirm Rosenthal’s hypothesis.
In 1981, Trump applied for a casino license from the New Jersey Casino Control Commission. With his application, Trump submitted some of his tax returns from the 1970s. These returns were leaked, and they revealed Trump paid no income tax in 1978 and 1979. For 1975-77, Trump paid a total of only $75,000 in federal income taxes.
The Daily Beast reported several months ago that Trump also paid $0 of income tax in 1984. The reporter found Trump’s tax return for that year in a court ruling from the New York State Division of Tax Appeals.
How does Donald Trump manage to get out of paying taxes when he makes millions of dollars a year?
Paying no taxes is actually quite common for major real estate developers, because they often report losses which are greater than their income for the year. This does not mean that they are actually losing money; they finagle the numbers so it looks like they are.
For example, Trump can claim that his properties lose value over time, even though most real estate gains value as time goes on. Trump can include the supposedly declining value of his properties in the losses he reports on his tax returns.
Trump can deduct the operating costs of his businesses from his income. However, Trump’s “operating costs” could include his flights on private jets and $500 meals, because his personal life and business life so often overlap.
Trump is not breaking any laws by paying little or no money in taxes. He is taking advantage of loopholes in the tax code. Several bi-partisan measures to close loopholes in the tax code have failed in Congress.
Check out this video of Donald Trump giving multiple reasons why he won’t release his tax returns:
Image via Flickr by Matt Johnson under a Creative Commons License 2.0.
