Donald Trump has come under fresh scrutiny over his financial history after the New York Times disclosed that his 1995 tax return included a $916m loss that could have allowed him to avoid paying federal income tax for almost two decades.
The Trump campaign did not challenge the authenticity of the tax return, but said the property mogul was a “high-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required”. Jack Mitnick, an 80-year-old retired accountant who prepared the 1995 returns, told the New York Times that the documents were “legit”.
Helped by outside tax experts, the New York Times concluded that the $916m loss would have enabled Mr Trump to avoid paying taxes on $50m of income for 18 years. The revelation comes as the New York tycoon continues to refuse to release his tax returns — failing to follow what has been accepted practice for all US presidential candidates since Richard Nixon. He has refused to make public his returns on the grounds that they are under audit, even though the Internal Revenue Service has said he has no obligation to keep them private.
During the first presidential debate, Hillary Clinton lambasted her rival over his refusal to release his returns. She suggested he wanted to hide the fact that he paid no federal tax, or that he was not as rich as he claims to be. When Mrs Clinton pointed out that Mr Trump had paid no federal tax several decades ago — according to a filing that he submitted as part of a process to obtain a casino licence — the Republican interrupted to say: “That makes me smart.”
The disclosure of the 1995 tax returns comes at the end of a terrible week for Mr Trump.
After gaining in the polls in recent weeks and overtaking Mrs Clinton in some key states such as Ohio and Florida, his performance in the first debate was panned by Democrats and many Republicans, and raised new questions about his lack of self-discipline. Mrs Clinton skilfully got under her opponent’s skin, forcing him to resort to some of his trademark bombastic rhetoric.
In the wake of the debate, Mr Trump sparked fresh concern among Republicans with a week-long rant about Alicia Machado, a former Miss Universe who he once criticised for putting on weight. Mrs Clinton mentioned the former beauty queen in the debate as an example of the women who have been verbally abused or insulted by Mr Trump.
While there was no suggestion that Mr Trump did anything illegal with regards to his tax affairs, the filing reinforced how wealthy people use loopholes in the tax code for their personal benefit. The document showed that Mr Trump declared $7.4m in interest income, but just slightly more than $6,100 in pay. According to the New York Times, IRS rules at the time would have permitted Mr Trump to use the $916m loss to offset income in the three previous years and the 15 years after declaring the loss.
In its statement, the Trump campaign said the “illegally obtained” tax document was an example of the newspaper being an extension of the Clinton campaign.
“Mr 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, along with very substantial charitable contributions,” his campaign said in the statement on Saturday evening. “Mr Trump knows the tax code far better than anyone who has ever run for president and he is the only one that knows how to fix it.”
The Clinton campaign described the revelation as a “bombshell report [that] reveals the colossal nature of Donald Trump’s past business failures and just how long he may have avoided paying any federal income taxes”.
“In one year, Donald Trump lost nearly a billion dollars. A billion,” said Robby Mook, the Clinton campaign manager. “He stiffed small businesses, laid off workers, and walked away from hardworking communities. And how did it work out for him? He apparently got to avoid paying taxes for nearly two decades — while tens of millions of working families paid theirs. He calls that ‘smart.’ Now that the gig is up, why doesn’t he go ahead and release his returns to show us all how ‘smart’ he really is?”