Despite what Donald Trump says, we really can learn a lot from his tax returns - even from the partial ones made public by The New York Times.
The major takeaway from the three pages of Trump’s 1995 returns that the Times made public is that Trump is right when he says the system is rigged. What he doesn’t say is that it’s rigged in his favour and in the favour of people like him - and against regular people, those of us who earn money, pay income tax on it, and financially support the country in which we live.
To keep things relatively simple, I’m telling you what I see in Trump’s returns, based on my decades of experience parsing financial filings. I will try not to get bogged down in numbers and technicalities.
Sure, the $900 million-plus of losses reported by The New York Times - losses that could be used to offset income for a total of 18 years - are totally shocking. Legal, yes. But shocking.
But there’s something I consider even more shocking - although it involves a much smaller number.
Donald Trump's most controversial quotes
Donald Trump's most controversial quotes
1/14 On Isis:
"Some of the candidates, they went in and didn’t know the air conditioner didn’t work and sweated like dogs, and they didn’t know the room was too big because they didn’t have anybody there. How are they going to beat ISIS?"
2/14 On immigration:
"I will build a great wall — and nobody builds walls better than me, believe me —and I’ll build them very inexpensively. I will build a great, great wall on our southern border, and I will make Mexico pay for that wall. Mark my words."
3/14 On Free Trade:
"Free trade is terrible. Free trade can be wonderful if you have smart people. But we have stupid people."
PAUL J. RICHARDS | AFP | Getty Images
4/14 On Mexicans:
"When Mexico sends its people, they’re not sending their best. They’re sending people that have lots of problems. They’re bringing drugs. They’re bringing crime. They’re rapists."
5/14 On China:
"I just sold an apartment for $15 million to somebody from China. Am I supposed to dislike them?... I love China. The biggest bank in the world is from China. You know where their United States headquarters is located? In this building, in Trump Tower."
6/14 On work:
"If you're interested in 'balancing' work and pleasure, stop trying to balance them. Instead make your work more pleasurable."
7/14 On success:
"What separates the winners from the losers is how a person reacts to each new twist of fate."
8/14 On life:
"Everything in life is luck."
9/14 On ambition:
"You have to think anyway, so why not think big?"
10/14 On his opponents:
"Bush is totally in favour of Common Core. I don't see how he can possibly get the nomination. He's weak on immigration. He's in favour of Common Core. How the hell can you vote for this guy? You just can't do it."
11/14 On Obamacare:
"You have to be hit by a tractor, literally, a tractor, to use it, because the deductibles are so high. It's virtually useless. And remember the $5 billion web site?... I have so many web sites, I have them all over the place. I hire people, they do a web site. It costs me $3."
12/14 On Barack Obama:
"Obama is going to be out playing golf. He might be on one of my courses. I would invite him. I have the best courses in the world. I have one right next to the White House."
13/14 On himself:
"Love him or hate him, Trump is a man who is certain about what he wants and sets out to get it, no holds barred. Women find his power almost as much of a turn-on as his money."
14/14 On America:
"The American Dream is dead. But if I get elected president I will bring it back bigger and better and stronger than ever before and we will make America great again."
By my read of the Trump tax return published by The New York Times, he would have been tax-free because of a $15,818,562 loss reported on Line 11 of the return under “Rental real estate, royalties, partnerships, S corporations, trusts, etc.” It looks to me that this loss reflects the outrageous, special tax break that real estate developers that people like Trump can get, but that the rest of us can’t.
To give you the brief version, people who qualify as real estate developers or managers can use depreciation deductions to offset non-real-estate income. But people who don’t qualify for this special treatment can’t do that. (For full details, ask a tax expert about Section 469 of the tax code.)
Now, to the $900-plus million loss reported by The New York Times - which vastly exceeds any cash losses that Trump would have suffered in the collapse of his casino-hotel-airline empire, which fell apart in the early 1990s and resulted in four bankruptcies. (He had two more bankruptcies, in 2004 and 2009, from a publicly traded company in which he was the primary shareholder.)
I’m guessing, but I can’t tell for sure - there’s not enough information - that the loss has to do with the collapse of his empire. I don’t understand how Trump, who had very little of his own cash invested in his projects in the 1990s but did personally guarantee part of their debt, could end up with tax losses of that magnitude. They’re almost certainly paper losses rather than out-of-pocket losses.
It’s possible that those losses somehow vanished into the ether from which they came - we have no way to tell.
What we can tell, though, is that what I wrote recently about Trump’s “That makes me smart” boast when Hillary Clinton prodded him about not paying taxes was right.
If Trump were truly smart - and wanted to lead by example - he would have disclosed his tax returns, showed the loopholes he used, and vowed to close them.
I have plenty of problems with the Clintons’ financial behavior, as I wrote. But at least Hillary Clinton is proposing tax code changes that would cost her and her family money. Trump, by contrast, is proposing tax changes that would greatly benefit the commercial real estate business, which is his primary field, and would greatly benefit his own family. And when I asked his campaign last week whether he was proposing any tax changes that would cost him and/or his family any money, I got no reply.
This whole column and most of the articles I’ve read are based almost entirely on just one page of Trump’s tax filings - the front page of his 1995 New York return. So, you see, we have learned quite a lot from Trump’s tax returns - and we could learn a lot more when and if more of them make their way into the public domain.
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