— Donald Trump, news conference, July 27, 2016
“Mr. Trump has said that his taxes are under audit and he will not be releasing them.”
— Trump campaign chief Paul Manafort, CBS interview, July 27, 2016
We have officially entered the general election campaign, with both major parties’ conventions behind us. For the past four decades, every major-party presidential candidate has released tax returns — and most of them had done so by the time they were officially nominated at the conventions.
That is not the case this year. Donald Trump has consistently refused to release his returns, and there’s no indication he will do so before the election. By contrast, Hillary Clinton has released three decades’ worth of tax returns. Only Jeb Bush had released more tax returns than Clinton out of all the candidates who sought their parties’ presidential nomination this year.
Trump once declared that there’s “nothing to learn” from the returns, which was Four-Pinocchio false. He is now citing a pending Internal Revenue Service audit, even though the first president to release his taxes, Richard Nixon, did so in the middle of an audit. Moreover, Trump has not released his tax returns from before 2009, which are no longer under audit, according to his attorney.
Vice-presidential nominees also have routinely released their tax returns. Republican Mike Pence and Democrat Tim Kaine have not yet released their returns. We have not heard back from the Trump campaign about whether Pence will release his returns; we will update this column if we do. A Clinton campaign official said Kaine “will release his tax returns in the near future.”
Presidential candidates have no legal obligation to release their returns, but there has long been a tradition to do so for the sake of transparency. While Trump has not released the returns, his long history of litigation has given the public a sense of what is in his returns.
What Donald Trump is doing on the campaign trail
Here’s a look at what we know about Trump’s taxes: He did not pay any (or nearly any) income taxes at least five times in the past 40 years. [Update: On Oct. 1, the New York Times revealed Trump had reported a $916 million loss in 1995, which would have been large enough to allow Trump to avoid paying any federal income taxes for up to 18 years.]
The earliest record of Trump’s publicly revealed income tax information dates to the late 1970s, when Trump paid no federal income tax for at least two years. Trump’s tax returns, examined by the New Jersey Casino Control Commission in 1981, showed that he paid $0 in federal income taxes in 1978 and 1979, The Washington Post found. During those two years, he had no federal income tax liability primarily because of the losses he incurred operating his rental properties.
In 1975, 1976 and 1977, Trump did pay federal income taxes, it showed. The breakdown:
- 1975: $76,210 in income; $18,714 in taxes
- 1976: $24,594 in income; $10,843 in taxes
- 1977: $118,530 in income; $42,386 in taxes
- 1978: -$406,379 in income; no taxes
- 1979: -$3,443,560 in income; no taxes
The next record available is from 1984, when Trump also reported no income. In a Daily Beast article, David Cay Johnston wrote about rulings in two tax appeal cases (Trump lost both) that shed new light on Trump’s finances in 1984. (The judges’ rulings in the two cases are embedded at the end of this factcheck.)
In one case, Trump contested whether he was subject to a city business tax on his gains from selling a condominium unit in 1984. A New York City administrative law judge found that Trump had reported no personal income in his 1984 federal income tax but reported a $2,365,352 capital gain from the sale and total deductions of $626,264. Yet Trump had not provided documentation justifying the deductions.
That year, Trump reported his principal business activity as “consulting” — but reported no income or receipts from this activity, the judge wrote. He reported a negative taxable business income of $619,227.
“The record does not explain how Petitioner had significant expenses without any concomitant income from his consulting business,” the judge wrote.
Trump provided a photocopy of his tax return, which had the signature of his longtime accountant, Jack Mitnick. But Mitnick testified that neither he nor his firm prepared the tax return and that he did not know who did. Johnston wrote: “Among the issues raised by Mitnick’s 1992 testimony is whether Trump or someone acting on his behalf substituted a return that he or someone else prepared and then transferred Mitnick’s signature using a photocopier.”
The judge ruled that Trump was “engaged in a taxable trade or business” and was, therefore, subject to the business tax. The judge didn’t buy Trump’s complaint that he was being double-taxed. The judge said, “The problem at issue is not one of double taxation, but of no taxation.”
The second case also involved Trump’s business activities and whether he took deductions without providing proper documentation. Mitnick testified that Trump paid no federal income tax in 1984 — yet he tried to use a tax credit against his income tax liability.
“Mr. Mitnick has prepared Donald Trump’s income tax returns for the last 20 years and testified that Mr. Trump had no income tax due against which the credit ‘could have been applied,’” the judge in that case ruled.
There were at least two years in the early 1990s when Trump appeared to have paid zero, or nearly zero, personal income taxes, Politico reported.
This was not illegal but due to losses from his hotel and casino in the early 1990s. (Ultimately, he would declare bankruptcy on those properties.)
Politico reviewed documents covering Trump’s tax liability in 1991 and 1993, as maintained by the New Jersey Division of Gaming Enforcement and the Casino Control Commission. The report showed that in 1993, Trump had a net operating loss that was great enough to prevent him from owing federal income taxes. Creditors limited Trump to a $450,000-a-month allowance (about $750,000 in 2016 dollars)
His debts in 1991 also shielded him from tax obligations, Politico found, citing the document: “As various lenders cancel all or part of DJT’s debt, he will in all likelihood realize taxable gains. However, given the [redacted] in carryforward net operating losses (“NOLS”), any tax resulting should be minimal, if any.”
Trump offered a response through a spokeswoman to Politico’s question about not paying income taxes in the early 1990s: “Welcome to the real estate business.”
[Update: Trump declared a loss of $916 million on his 1995 income tax returns, and could have used that loss to avoid paying any federal income taxes over an 18-year period thanks to tax rules that favor wealthy real estate investors, according to the New York Times.
Mitnick confirmed the authenticity of the tax records to the Times, and recalled that the tax software program he used at the time did not allow him to report a nine-figure loss. Mitnick manually had to add numbers using a typewriter in order to report the loss of $915,729,293.
Trump campaign’s statement in response to the tax documents neither confirmed nor challenged the $916 million loss. Instead, the statement read that Trump “has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes.”]
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