The New York Times‘s report on Donald Trump’s tax records from 1995 suggests the Republican nominee may have avoided paying federal income taxes for up to nearly two decades afterward. That’s because Trump declared a loss of almost $1 billion from his business dealings, and U.S. tax law allows wealthy individuals to apply losses to future tax bills, reducing one’s tax burden. “Although Mr. Trump’s taxable income in subsequent years is as yet unknown, a $916 million loss in 1995 would have been large enough to wipe out more than $50 million a year in taxable income over 18 years,” the Times wrote.
The report doesn’t offer proof Trump did, in fact, erase his tax liability in the subsequent years. But it does reveal the fact that Trump lost a considerable amount of money on a number of failed business ventures, including three casinos, Trump Airlines, and other real-estate purchases. The question is, whose money did Trump lose?
That’s what an Australian financial analyst and blogger wants to know. In a post on his blog Bronte Capital, John Hempton says there are two possibilities for what Trump’s $916 million loss looks like. Either Trump’s loss was from his own personal wealth, Hempton writes, “or the loss was passed on to someone else by The Donald defaulting on debt.” In other words, Trump would have defaulted on the debt he owed to the investors in his casinos and other business ventures. Had this been the case, he would have been legally unable to apply those losses to future earnings and reduce his tax burden.
Writing at CNN, tax expert Edward McCaffery says it would be “wrong to assume that Trump’s nearly billion-dollar loss came from his own money.” McCaffery writes: “Banks, other lenders or investors could well have put up the money generating the losses that Trump is claiming on his own tax returns.”
Here’s more from Hempton:
If that’s the case, Trump could still be avoiding taxes—but in a different, less legal way. Hempton, who says he once worked for the Australian treasury as an expert in tax avoidance, has a theory:
Read the whole thing here.
