What do three pages of Trump tax returns show us?

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Republican presidential nominee Donald Trump arrives at a campaign rally in Manheim, Pennsylvania, U.S., October 1, 2016.  REUTERS/Mike Segar - RTSQD6A

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HARI SREENIVASAN, PBS NEWSHOUR WEEKEND ANCHOR: Donald Trump is the first major party presidential candidate in 40 years not to release any tax returns for public review. But that has not stopped investigative reporters from digging through the candidate’s financial disclosure forms, court records, casino commission filings, and other available documents to figure out Trump’s net worth and his income.

Today, “The New York Times” published an analysis of part of one Trump tax return, from 1995, where Trump declared business losses so large, the return suggests the billionaire may have avoided paying any federal income taxes for 18 years.

Joining me now to explain all this is one of the article’s authors, David Barstow.

David, this is a team effort at “The New York Times,” three or four people worked on this. How do we — how do we know from — you just have basically three documents that you’ve made public. How do we know that he declared this loss and it could have impacted his income going forward?

DAVID BARSTOW, THE NEW YORK TIMES: Well, we took a number of steps. First of all, the documents were mailed to us anonymously, and so, we spent an awful lot of time and effort trying to authenticate the documents. We finally succeeded in doing that when we were able to present them to Donald Trump’s tax accountant —

SREENIVASAN: At the time.

BARSTOW: At the time, the man who had spent 30 years or more doing Donald Trump’s taxes. And after talking to him at length and doing some additional reporting, we came to believe that these were indeed the real thing.

And also, today I believe, the Trump campaign has effectively confirmed the validity of these returns. They haven’t challenged any of the members, in fact his surrogates are saying that this shows his genius at figuring out how to avoid paying taxes. But in looking carefully that these three pages which to be sure are just a tiny portion of what a Donald Trump tax return would look like, we’re able to see that he showed this enormous loss of roughly $916 million in 1995, and that under IRS tax rules then in effect, he could use some important provisions of the code to apply that loss against another $916 million in taxable income.

So, as one of the tax experts explained to us if one of his clients brought him a tax return that looked like this in 1995, he would be saying to him congratulations, you can make $916 million and not pay a single nickel in taxes on this. It’s not to say that Donald Trump did anything illegal or improper, it’s really about him, the tremendous tax advantages that apply to a wealthy father like Donald Trump.

SREENIVASAN: He considers it smart as he said in the debate, that he’s figured out a way to stay within the rules and minimize the tax as much as possible.


So there’s nothing in at least three these he three pages that indicate any illegality.

BARSTOW: Correct. And what it looks like happened here is in the early 1990’s, Donald Trump came perilously close to complete disaster in his business affairs.

What it appears happened is that the losses that his businesses were suffering through the various tax provisions that we describe today, it allowed those losses to effectively flow on to his personal income tax form, which then would allow him for up to 18 years under IRS tax rules to apply as a way of wiping out any potential tax debt for say, for example, him hosting “The Apprentice”. He’s paying — being paid $50,000 to $100,000 per episode. That could be canceled out. He made another $45 million running his casino companies. That could — tax-free.

SREENIVASAN: The Trump campaign in their statement and I just want to read this out fully. It says, “Mr. Trump is a highly skilled businessman who has a fiduciary responsibility to his business, his family, and his employees to pay no more tax than legally required. That being said, 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 various substantial, charitable contributions. 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.”

So, when you talk to the tax experts, is this shrewd business acumen on his part?

BARSTOW: In talking to the man who was Donald Trump’s tax accountant, the man who prepared this tax return, what he explained is that Donald Trump understood very well the way the tax code could be used to protect his wealth and help his wealth grow. And he said as well that the way Donald Trump used the various tax deductions provisions etcetera isn’t different from the way other really wealthy real estate developers in New York might have used those deductions. The difference is, his just had a few more digits.

All right. David Barstow, part of “The New York Times” team that has published three pages of Donald Trump’s tax returns from 1995. Thanks for joining us.

BARSTOW: You’re welcome.

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