By JOHN VOSKUHL, Bloomberg
republished from www.accountingtoday.com
Democratic presidential nominee Hillary Clinton called out Republican Donald Trump Monday night for paying no federal income taxes on some of his returns from decades ago.
Trump responded: “That makes me smart.”
The exchange centered on an issue that has dogged Trump throughout the campaign. He has departed from roughly four decades of tradition for presidential nominees by not releasing his tax returns. Trump says his returns are under an Internal Revenue Service audit, and he won’t release them until that’s complete. IRS officials say there’s no rule preventing taxpayers from releasing their returns, even when they’re under audit.
On Monday, Clinton—who has posted nine years’ worth of tax returns online—speculated on Trump’s reasons for not releasing his. “There’s something he’s hiding,” she said, adding that it might be that his net worth is less than the $10 billion he claims, or that he hasn’t given much to charity, or that he owes money to Wall Street and foreign banks.
“Or maybe he doesn’t want the American people—all of you watching tonight—to know that he’s paid nothing in federal taxes,” Clinton said. “Because the only years that anybody’s ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license and they showed he didn’t pay any federal income tax.”
The Washington Post reported earlier this year that returns Trump had filed with the New Jersey Casino Control Commission in 1981 showed that he’d paid no federal income taxes in 1978 and 1979. The Post reported that the same filings showed that he had paid $18,714 in taxes on $76,210 in income in 1975; he paid $10,843 in taxes on $24,594 in income in 1976 and he paid $42,386 in taxes on $118,530 in income in 1977.
For 1978 and 1979, Trump took advantage of a tax-code provision popular with developers that allowed him to report negative income, according to the Post. He told the newspaper, “When you’re in the real estate business, you do have certain tax advantages.” Developers can depreciate the value of real estate to reduce their taxable income.
Politico reported that Trump appeared to have paid no federal income taxes in 1991 and 1993, when his casino holdings were in trouble and regulators were monitoring his finances. “Welcome to the real estate business,” Trump said in an e-mail to the news website, via his spokeswoman.
Trump told ABC News in May that he works “very hard to pay as little tax as possible.”
On Monday night, Trump responded to Clinton’s accusations by saying “politicians like Secretary Clinton” squandered tax money, making the U.S. a debtor nation. “We’re a serious debtor nation,” he said.
The U.S. needs to repair infrastructure nationwide, but “we don’t have the money because it’s been squandered on so many of your ideas,” he said to Clinton.
“And maybe it’s because you haven’t paid any federal income tax for a lot of years,” she said.
“It would be squandered too, believe me,” he responded.
Trump on Monday repeated an offer he’d made previously—that he’d release his tax returns if Clinton releases more than 30,000 deleted e-mails that her attorneys didn’t turn over to the U.S. State Department.
Clinton’s campaign has said those e-mails, stored on a private e-mail server that Clinton used during her term as secretary of state, were found to be unrelated to her public role and were deleted. Her lawyers turned over thousands of e-mails that they said were work-related.
After a yearlong federal investigation, Federal Bureau of Investigation Director James Comey said in July that Clinton and her top aides were “extremely careless” in handling classified information, but there wasn’t sufficient evidence of intentional wrongdoing to prosecute them. The Justice Department closed the case.
Clinton on Monday called her decision to use the private server “a mistake.” Trump said it was more than a mistake, though, because it was intentional.
Trump also repeated that he would release his tax returns when an IRS audit concludes. In March, Trump’s campaign released a letter from his tax lawyers saying his returns for 2002 through 2008 were no longer under audit, but Trump has yet to release them.
Federal law bars the IRS or any other government official from commenting on an individual taxpayer’s tax returns—including whether those returns are under audit. So it will be up to Trump to announce when any audit of his returns has been completed.
Trump’s son, Donald Trump Jr., told the Pittsburgh Tribune this month his father has withheld his returns “because he’s got a 12,000-page tax return that would create probably 300 million independent financial auditors out of every person in the country asking questions that are going to distract from his main message.” But the elder Trump told ABC News: “I think people don’t care” about his returns.
—With assistance from Lynnley Browning