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David Cay Johnston: Trump tax documents illustrate “separate and unequal” income tax systems
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Republican presidential nominee Donald Trump may have paid no federal income taxes for almost two decades, according to reporting and tax analysis from the New York Times.
The paper got a hold of part of Trump’s 1995 tax filings, which show that he recorded a loss of almost $916 million that year — enough of a loss that it could offset taxable income for 18 years.
David Cay Johnston, author of “The Making of Donald Trump,” is an investigative journalist who focuses on tax issues.
On how someone could carry a loss forward against potential future income:
Congress has a provision that allows you, if you have mismanaged your business or had misfortune, to take those losses and spread them over the business over a number of years. You can go back two years, and forward for 15, but this is not for capital investment. This is for the business having an operating loss. Now if you own real estate and you mismanage it, that’s one of the ways that you can drive down its value.
On what this filing tells us about Trump the businessman:
Through smart use of the tax code, Trump was able to spend years not paying taxes. In fact, the last year we know he actually paid income taxes was 1977. And there’s every reason to think he has not paid any income taxes since then. And this has to do with rules that most people don’t qualify for. But if you are in various positions that Congress favors — if you’re a private equity manager, if you’re a professional athlete or a movie star — there are special rules that will allow you to enjoy an enormous income, and pay little or no tax.
On whether these are provisions that tend to favor the rich:
Most of the provisions that allow you to defer and delay taxes require you to be wealthy first. America really has two income tax systems: separate and unequal. One is for workers and pensioners, whose taxes are withheld from their pay before they get it. The other system is for people who control businesses of various kinds, but especially ones Congress favors — real estate, hedge funds, private equity funds, movie making. And people in those businesses are allowed to pay their taxes by and by in the future.
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