Trump Tax Scandal
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Overview
The Trump Tax Scandal refers to the fallout from documents leaked to the New York Times[1] that indicate Republican presidential nominee Donald Trump could have avoided paying taxes since 1995.
History
Throughout the 2016 United States Presidential Election, Trump has bucked the tradition of presidential candidates releasing their tax returns, causing speculation that something detrimental to his campaign and reputation was hiding in them.[2] In the first Presidential Debate, Democratic nominee Hillary Clinton questioned why Donald Trump had not released his tax returns. Trump may have alluded to the fact he had not paid taxes and bragged, "That makes me smart."[14]
On October 1st, 2016, after receiving a leak of some of Trump's tax returns, The New York Times published an article that revealed Trump had lost $916 million dollars in 1995, "from the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan." Because of American tax laws, the loss would have wiped out over $50 million dollars in taxable income over the next 18 years.
Developments
The news dominated talk shows on October 2nd, 2016. On CNN,[3] Rudy Giuliani called Trump a "genius" for avoiding his tax returns. Clinton released an ad attacking Trump about the scandal that day.[4]
Three pages of Trump's tax returns confirm he's a business failure who's gotten rich at your expense. Imagine what he’s hiding in the rest. pic.twitter.com/E3Wt3KRleN
— Hillary Clinton (@HillaryClinton) October 3, 2016
Slate,[5] NPR,[6] CNN,[7] and more speculated the leak could hurt the Trump campaign. ThinkProgress[13] and other Twitter users found instances of Trump complaining about where his now non-existent tax dollars were going. In a tweet,[8] Trump suggested the news proved he knows America's tax laws better than anyone who has ever run for president and he was the only one who could fix them.
#LastTimeTrumpPaidTaxes
On Twitter, the hashtag #LastTimeTrumpPaidTaxes spread as users reveled in 90s Nostalgia and used it to mock how Trump had avoided paying taxes for maybe twenty years. Uproxx,[9] Huffington Post,[10] TIME,[11] and Daily Mail[12] covered the spread of the hashtag.
New York Times Update
On October 31st, 2016, The New York Times[15] reported that it had discovered how Trump employed a number of legally questionable methods to avoid paying taxes, mainly the "stock-for-debt" swaps, a tax avoidance practice that had been routinely employed by large corporations for the same purpose. According to the article, Trump's proposed maneuvers were "so legally dubious" that his own lawyers advised him that the Internal Revenue Service (IRS) would most likely declare it improper and call for an audit for at least six different reasons.
"Say a company can repay only $60 million of a $100 million bank loan. If the bank forgives the remaining $40 million, the company faces a large tax bill because it will have to report that canceled $40 million debt as taxable income.
Clever tax lawyers found a way around this inconvenience. The company would simply swap stock for the $40 million in debt it could not repay. This way, it would look as if the entire $100 million loan had been repaid, and presto: There would be no tax bill due for $40 million in canceled debt."
The loophole practice eventually became regulated in 1993, the year after Trump pulled off the maneuver to minimize his tax filings. The New York Times also reported that Trump's tax advisers employed a similar concept in 1992, in which "stock" is replaced with "partnership Equity."
In the wake of the New York Times report, John L. Buckley, who served as the chief of staff for Congress’s Joint Committee on Taxation in 1993 and 1994, described Trump's act as “He deducted somebody else’s losses,” meaning that only the bondholders who forgave Mr. Trump’s unpaid casino debts should have been allowed to use those losses to offset future income and reduce their taxes.
Rachel Maddow's Report
On March 14th, 2017, MSNBC journalist Rachel Maddow tweeted a curious message revealing that her news team has obtained exclusive copies of "Trump's tax returns" about an hour and a half before the airing of her daily news program The Rachel Maddow Show on MSNBC. Given the shrouds of mystery surrounding President Trump's tax returns, Maddow's tweet immediately went viral, racking up more than 84,000 retweets and 155,000 likes in less than 24 hours.
Shortly after Maddow's teaser tweet began circulating the social media, the White House preemptively released a statement confirming that Donald Trump paid $38 million USD in federal income tax on over $150 million in income for the fiscal year of 2005.
![FolT 40 (2005) Tax and S8 Amount from lne 37 (adjusted gross Incoms) 38 Credits 39a Check Dian da en l..] It f□You were born before January 2, 1941, t □Blind.) □Spouse was born before January 2, 1941, □Blind. J Total boxes checked ト39a If. bf your apous tamiz0 n asaparate retum a you were a dual-stslus allen, seo pago ss and enoak hers bo anine 40 ltemized deduouons (rom Schsdule A) o your viundard deduction (see let margin) r bof who41 Subtract line 40 feom line 38 os a dspandent 42 lins 38 is over $109,475, or you provided housing to a person displaced by Hurricane Katrina see page 37.Otherwise, multiply $3,200 by the total number ol exemptions claimed on line 6d 43 Taxable income. Subtract line 42 from line 41. If lino 42 ls more than line 41, enler小 | 44 Tax. Check it any taxls tram: a Form(s)af14 b. Forn 4972 45 Alternative minimum tax. Attach Form 6251 46 Add lines 44 and 4 47 48 .Ali others; aüng ce Foreign lax cradit. Attach Form 1116 il required Credit for child and dependent care expenses. Attach Farm 2441 wiéoe).49 Credit lor the slderly or the disabled. Attach Schedule R 10,000 Education credits. Altach Form 8863 hou nw51 Retirement savings contributions credi Attach Form 88 50 7,300 Child tax credit (ses page 41). Attach Form 8901 required 53 Adoption credil. Attach Form 8839 52 64 Credits from: 55 Oher credits. Chock applicable box(es): Form 8859 Form 3800 ー] Form B801 cr-Form 58 Add lines 47 through S5. These are your total credits 57 Subtract ling 56 trom line 46, lt line 56 is more than line 46, enter-0 57 Other 3 Sel-employment tax. Artach Schedule SE Taxes 59 Socal security and Medicare tax on tip income not reported to employar. Attach Form 4137 60 Addtional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 it required 61 Advanca earned income credit payments from Form(s) W-2 82 Household employment laxos. Anach Schedule H 59 Add lines $7 through 62. This is your total tax Payments 64 Federal income tax withheld from Forms W.2 and 1099 8 2005 estimated tax payments and amount applied from 2004 returm /you have -66a Earn Bd income credit (EIC). 663 chid, Nontaxable comha pay election Scftosule Elc, 67 Excess sacial security and tier 1 RRTA tax withheld (see page 69.SI 68 Additional chlld tax credit. Attach Form 88 12 69 Amount paid with request for extension to file (sce page 59) 70 Payments from: a Form 2439 bLx Form 413e s□Form a885 72 69 | 701 5 Refund tt line 71 is more man line 63, subiracl ine 63 from line 71. This is the amount you overpaid 73a Amount of lune 72 yo u want retunded to you and ill in 73b C, and 73d, Amount You Owe 74 75 Amount o! line 72 you want applied to your 2006 eatimated Amount you ows . Subtract line 71 trom line 63. For details on how to pay, soe page 60 76 Estimated tax D hird Party Do yau want to allow anothar person to discuss thls return with the IRS (sce page 81)? xJYes. Complete the folowing Designee PREPARER Personal identifeation Unda penal cs and complct per g d aacompany gae edu Ls and st on au information ot which prepvor has any knowledge. e ta u er Prpparer egelhan 4xPay4%s b巀 A ar p s RI nents, &AS lo lhe bos of rh nawiodge and bell el, they atre ea ed, Oaylime phéne numbs Joint roturn Prepar' SSN or PTIN Preparer's signature Use Only Fnao ployed ployod), adress 11 0S-0S INTEREST NOT INCLUDED * peNALTY NOT INCLUDED B8,B64 TOTAL DUE 2. 450.597.](https://i.kym-cdn.com/photos/images/newsfeed/001/232/645/dda.jpg "Donald Trump's Tax Returns (2005)")
Despite the high level of anticipation that built up in the hour leading up to the airing of the program, Maddow's findings from Trump's tax returns were largely met with lukewarm reception, as the documents seemed to suggest that Trump paid his taxes in compliance with the laws, and even criticisms from some progressives who interpreted the story as a distraction from the ongoing congressional debate on the healthcare bill.
Throughout the evening and the next morning, thousands of viewers who had tuned into The Rachel Maddow Show for the report continued to ridicule the anticlimactic nature of Maddow's findings on Trump's tax returns, including both supporters of President Trump and followers of Rachel Maddow, with hashtag #TrumpTaxReturns.
One of the most critical tweets came from none other than Donald Trump Jr., who sarcastically thanked Rachel Maddow for publicizing Trump's financial success and income tax filings (shown below).
New Jersey Law
On February 21st, 2019, the New Jersey State Senate passed a bill that would bar President Donald Trump from the 2020 presidential ballot in the state of New Jersey unless President Trump released his tax returns.[25] This would be the second attempt to pass the bill, after it was vetoed by Governor Chris Christie in 2017. This 2020 version of the bill would not go into effect until Governor Phil Murphy signed it into law.
State Senator Loretta Weinberg, one of the bill's co-sponsors, said, "It is so obvious with this president that had voters known some of what seem to be his business interests, he may not have been elected president."
More than 30 states have introduced similar legislation, but New Jersey is the first to pass it in the state senate. Those similar bills were met with criticism among supporters and detractors of Trump alike. Former California Governor Jerry Brown vetoed a similar bill in 2017. He said at the time, "Today we require tax returns, but what would be next? Five years of health records? A certified birth certificate? High school report cards? And will these requirements vary depending on which political party is in power?"
Trump critic and Twitter[26] user Ed Krassenstein lauded the news. He tweeted, "BOOM! The New Jersey Senate is voting on a bill that will prevent Trump from being on the 2020 Presidential ballot unless he releases his tax returns. Every damn state in America should be doing the same thing! We deserve to know! Who's with me?" The tweet received more than 14,000 retweets and 48,000 likes in 24 hours (shown below, left).
Twitter[27] user @JerryAvalos7 disagreed (shown below, right). They tweeted, "Totally illegal, denying the people of #NewJersey the right to vote for a candidate is over the top unConstitutional, If it hasn't occurred to the #Democrats, the government does have Trump's tax returns, he does it every year, its called the IRS. Jeez."
Search Interest
External References
[1] The New York Times – Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found
[2] Chicago Tribune – Commentary: Donald Trump's tax returns: 6 theories why he won't release them
[3] The Week – Rudy Giuliani says Trump's taxes prove 'he's a genius'
[4] Twitter – @HillaryClinton
[5] Slate – The Six Main Reasons Why the Times Tax Story Could Be Devastating For Trump
[6] NPR – Tax Returns, Threats Of Hacks: Surprise! It's October
[7] CNN – What Trump tax report could mean for his campaign
[8] Twitter – @RealDonaldTrump
[9] Uproxx – The Internet Had A Blast Pointing Out Things That Happened The ‘Last Time Trump Paid Taxes’
[10] Huffington Post – Twitter Users Get Nostalgic Over The #LastTimeTrumpPaidTaxes
[11] Time – The Internet Can’t Stop Talking About the #LastTimeTrumpPaidTaxes
[12] Daily Mail – Twitter users mock the 'last time Trump paid taxes' with '90s references – while unearthing The Donald's critical tweets about people not paying taxes
[13] Think Progress – 7 tweets by Trump about taxes that are very awkward now
[14] Uproxx – Donald Trump Admits He Feels ‘Smart’ About Not Paying Federal Income Taxes During The Debate
[15] New York Times – Donald Trump Used Legally Dubious Method to Avoid Paying Taxes
[16] Twitter – @RachelMaddow's Tweet
[17] New York Times – Trump Wrote Off $100 Million in Losses in 2005, Leaked Forms Show
[18] New York Times – Donald Trump’s Tax Documents From 2005
[19] Twitter – Hashtag Results for #TrumpTaxReturns
[20] CNBC – Here's one curious thing about the Donald Trump tax leak
[21] The Atlantic – What Trump's 2005 Tax Returns Reveal
[22] NBC News – Trump Paid $38 Million in 2005 Federal Income Tax, White House Says Before Report
[23] AOL – Reaction to MSNBC's report on President Trump's taxes
[24] CNN – Did Donald Trump leak his own tax return?
[25] Courier Post – Bill would keep Trump off 2020 NJ ballot unless he releases his tax returns
[26] Twitter – @EdKrassen's Tweet
[27] Twitter – @JerryAvalos7's Tweet
![FolT 40 (2005) Tax and S8 Amount from lne 37 (adjusted gross Incoms) 38 Credits 39a Check Dian da en l..] It f□You were born before January 2, 1941, t □Blind.) □Spouse was born before January 2, 1941, □Blind. J Total boxes checked ト39a If. bf your apous tamiz0 n asaparate retum a you were a dual-stslus allen, seo pago ss and enoak hers bo anine 40 ltemized deduouons (rom Schsdule A) o your viundard deduction (see let margin) r bof who41 Subtract line 40 feom line 38 os a dspandent 42 lins 38 is over $109,475, or you provided housing to a person displaced by Hurricane Katrina see page 37.Otherwise, multiply $3,200 by the total number ol exemptions claimed on line 6d 43 Taxable income. Subtract line 42 from line 41. If lino 42 ls more than line 41, enler小 | 44 Tax. Check it any taxls tram: a Form(s)af14 b. Forn 4972 45 Alternative minimum tax. Attach Form 6251 46 Add lines 44 and 4 47 48 .Ali others; aüng ce Foreign lax cradit. Attach Form 1116 il required Credit for child and dependent care expenses. Attach Farm 2441 wiéoe).49 Credit lor the slderly or the disabled. Attach Schedule R 10,000 Education credits. Altach Form 8863 hou nw51 Retirement savings contributions credi Attach Form 88 50 7,300 Child tax credit (ses page 41). Attach Form 8901 required 53 Adoption credil. Attach Form 8839 52 64 Credits from: 55 Oher credits. Chock applicable box(es): Form 8859 Form 3800 ー] Form B801 cr-Form 58 Add lines 47 through S5. These are your total credits 57 Subtract ling 56 trom line 46, lt line 56 is more than line 46, enter-0 57 Other 3 Sel-employment tax. Artach Schedule SE Taxes 59 Socal security and Medicare tax on tip income not reported to employar. Attach Form 4137 60 Addtional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 it required 61 Advanca earned income credit payments from Form(s) W-2 82 Household employment laxos. Anach Schedule H 59 Add lines $7 through 62. This is your total tax Payments 64 Federal income tax withheld from Forms W.2 and 1099 8 2005 estimated tax payments and amount applied from 2004 returm /you have -66a Earn Bd income credit (EIC). 663 chid, Nontaxable comha pay election Scftosule Elc, 67 Excess sacial security and tier 1 RRTA tax withheld (see page 69.SI 68 Additional chlld tax credit. Attach Form 88 12 69 Amount paid with request for extension to file (sce page 59) 70 Payments from: a Form 2439 bLx Form 413e s□Form a885 72 69 | 701 5 Refund tt line 71 is more man line 63, subiracl ine 63 from line 71. This is the amount you overpaid 73a Amount of lune 72 yo u want retunded to you and ill in 73b C, and 73d, Amount You Owe 74 75 Amount o! line 72 you want applied to your 2006 eatimated Amount you ows . Subtract line 71 trom line 63. For details on how to pay, soe page 60 76 Estimated tax D hird Party Do yau want to allow anothar person to discuss thls return with the IRS (sce page 81)? xJYes. Complete the folowing Designee PREPARER Personal identifeation Unda penal cs and complct per g d aacompany gae edu Ls and st on au information ot which prepvor has any knowledge. e ta u er Prpparer egelhan 4xPay4%s b巀 A ar p s RI nents, &AS lo lhe bos of rh nawiodge and bell el, they atre ea ed, Oaylime phéne numbs Joint roturn Prepar' SSN or PTIN Preparer's signature Use Only Fnao ployed ployod), adress 11 0S-0S INTEREST NOT INCLUDED * peNALTY NOT INCLUDED B8,B64 TOTAL DUE 2. 450.597.](https://i.kym-cdn.com/photos/images/list/001/232/645/dda.jpg "Donald Trump's Tax Returns (2005)")
