Donald Trump likes to denounce other people for not paying taxes. Four years ago, he tweeted, “HALF of Americans don’t pay income tax despite crippling govt debt.” He complained that President Obama “only pays 20.5% on $790k salary. … Do as I say not as I do.” Last year, Trump groused that hedge fund managers “make a fortune, they pay no tax. It’s ridiculous … They’re making a tremendous amount of money. They have to pay taxes.”
Now it turns out that Trump himself may have sidestepped the IRS. Excerpts from his 1995 returns, leaked to the New York Times, show that he claimed a loss of nearly $1 billion, enough to cancel out many years of future earnings. We don’t know what he paid for sure, because Trump—unlike every other major-party presidential nominee since 1980—hasn’t released his returns. But the leaked documents create a presumption that for some time after 1995, as he raked in hundreds of millions of dollars, he paid no income tax.
Most politicians would be embarrassed by such a disclosure. Not Trump. He and his surrogates are out in force, spinning his tax avoidance as a virtue. Here are their rationalizations.
1. It’s legal. Trump and his advisers point out that the Times didn’t say his write-offs were unlawful. In a Sunday morning interview on ABC’s This Week, former New York Mayor Rudy Giuliani proclaimed: “This man has been audited every year. Never once has a criminal charge been brought against him. Never once has he been accused of violating the law.” Well, there are those pesky suits alleging fraud and racial discrimination. But as to criminal charges, the statement is correct. It’s also hypocritical. According to Trump, the government’s failure to indict Hillary Clinton over her emails shows that the system is rigged. But its failure to indict Trump is vindication.
2. There’s no proof he didn’t pay taxes. “All the story said was that kind of loss can be used for up to 18 years,” New Jersey Gov. Chris Christie pointed out on Fox News Sunday. “The New York Times does not have any information in that story that says Mr. Trump did not pay taxes.” Again, this is technically true. But it’s odd to hear such a lawyerly excuse from Trump’s campaign, which could settle the matter by releasing his returns.
3. This justifies our refusal to release his returns. The Times article illustrates “why releasing tax returns is so bad,” Giuliani complained on Meet the Press. “Somewhere around paragraph 18 they point out there was no wrongdoing. … And that’s why maybe somebody doesn’t want to put out their tax returns, because somebody will distort it that way.” The leaked pages from Trump’s tax returns were out of context. Therefore, Trump will continue to hide the context.
4. He paid other taxes. Giuliani claims Trump paid “hundreds of millions of dollars in taxes: state taxes, local taxes, excise taxes.” When Chuck Todd asked how voters could be sure of this, given Trump’s refusal to release his returns, Giuliani replied: “Because if he didn’t, he’d be in jail.” Trump’s lack of convictions, in a criminal sense, serves as his standard of ethics. And his payment of some taxes excuses his circumvention of others.
5. Everybody does it. According to Trump’s spokesmen, using loopholes to avoid taxes is a fine American tradition. “Forty-four percent, 45 percent of America doesn’t pay income tax,” Giuliani boasted on CNN’s State of the Union. That figure is down slightly from four years ago, when Republican presidential nominee Mitt Romney complained that “47 percent of Americans pay no income tax” (which led Giuliani to agree “that too high a percentage of Americans are not paying taxes”). Romney saw these people as freeloaders. Trump sees them as excuses for his own freeloading.
6. Trump is a genius. In their Sunday interviews, Christie and Giuliani used this word 14 times. “The man is a genius. He knows how to operate the tax code for the benefit of the people he’s serving,” Giuliani told CNN. On ABC, the former mayor effused: “He’s a genius at how to take advantage of legal remedies that can help your company survive and grow.” Gaming the system isn’t a vice. It’s a talent.
7. Losses are a sign of business acumen. CNN’s Jake Tapper asked Giuliani how Trump could be such a genius if he lost nearly $1 billion in a year. Giuliani explained that Tapper was naïve for focusing on the loss rather than on Trump’s use of the loss as a tax ploy. “There are not very many smart businessmen who don’t take advantage of the legal tax laws that are there. And if they are, then they are not very good businessmen,” Giuliani argued. “They don’t have very good lawyers, and they don’t have very good accountants.” Anyone can make money. To be great, you have to lose money and parlay the loss, through your lawyers and accountants, into a gain.
8. Failure is a step toward success. On NBC, Giuliani portrayed Trump’s 1995 losses as a sign that he could turn America around. Trump “did something we admire in America: He came back,” said Giuliani. “So did Steve Jobs. So did Winston Churchill. … Great men have big failures. And then they take those failures and they turn them into great results.” If at first you don’t succeed, try, try again. Unless you’re Obama or Clinton, in which case you should be fired.
9. Only an abuser can fix the system. “I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them,” Trump tweeted in response to the Times story. As president, Trump would continue to apply his intricate knowledge of the system. He would not, however, continue to exploit that knowledge. Believe me.
10. Trump did it for others. Trump’s campaign says he had “a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required.” When Tapper pointed out that the document in question was Trump’s personal tax return, not a corporate filing, Giuliani expanded this argument, insisting that anyone connected to Trump’s finances—investors, partners, lenders—could sue him for failing to use tax loopholes. Such a failure wouldn’t just be a business mistake, Giuliani argued. It would be a “breach” of “fiduciary duty” and might cost employees their jobs. Essentially, this is trickle-down altruism. No matter how self-serving Trump’s chicanery was, he had to do it for the little guy.
11. To pay the taxes would have been selfish. On ABC, Giuliani said a businessman would rightly be sued by investors if he refused to exploit tax loopholes “because it may make me look bad when I’m running for president.” Doing what’s best for the country, on the grounds that you might be held publicly accountable for your conduct, is a sin. Resist that temptation, and do the right thing: take the money.
12. Trump will use his trickery for our benefit. “You’ve got to figure out who you’re working for,” Giuliani told NBC. In his exploitation of tax loopholes, Trump “was working for private interests,” the former mayor explained. But as president, Trump would work for America. The tax story “shows you what a genius he is,” Giuliani told ABC. “I want that working for me. I want to see if he can produce these kinds of results for us.” Sure, Trump played Uncle Sam for nearly $1 billion in tax breaks. But if we pay Trump a $400,000 salary, he’ll be on our side.
13. Trump is a hero for promising to stop people from doing what he did. On Fox News, Christie offered “no apologies” for Trump’s tax maneuvers. In fact, Christie said the campaign was “taking a bow” for Trump’s having pledged to reform tax laws like those he exploited. “Donald Trump has been the one person who, against his own personal interests, has said that he wants to change those tax laws,” said the governor. Trump should be praised for sheltering his earnings, not condemned, because it shows how much future income he might have to give up if he reforms the tax code.
14. There’s no proof that Americans pay their taxes. “Most Americans pay their federal income taxes,” Tapper told Giuliani. But Giuliani wasn’t buying it: “Well, I don’t know. You don’t know most Americans, and I don’t know most Americans.” Trump withholds his returns and says you can’t prove he hasn’t paid up. But you don’t get the same presumption of innocence.
Together, these arguments paint a portrait of nihilism. In Trump’s campaign, the standard of moral conduct is staying out of jail. Hypocrisy is a boast. Gamesmanship and freeloading are virtues. Capitalism is about fielding the best lawyers, not the best products. And the best way for rich people to help the poor and the middle class is to stiff the government.
How much money has Trump paid in taxes? Without his returns, we can’t know. But from what he and his surrogates have said since the Times story came out, we know what’s in his soul and the souls of his henchmen: nothing.