You are here

Does Trump pay taxes? Debate triggers new scrutiny

Donald Trump loves to brag about how rich he is. One question swirling through the US presidential campaign now is this: Has he managed to avoid paying income taxes?

[WASHINGTON] Donald Trump loves to brag about how rich he is. One question swirling through the US presidential campaign now is this: Has he managed to avoid paying income taxes?

Mr Trump, a billionaire who steadfastly refuses to release his tax returns - a four-decade tradition among candidates for the White House - raised eyebrows with an odd remark during Monday's debate with Hillary Clinton.

Mrs Clinton, the Democrat, offered several hypotheses as to why Mr Trump, the Republican, might be declining to make that information public: Maybe he is not as rich or as charitable as he makes himself out to be.

Or, she mused, "maybe he doesn't want the American people, all of you watching tonight, to know that he's paid nothing in federal taxes."

With an estimated 84 million people watching the debate, Mr Trump quickly interjected, "that makes me smart."

A few minutes earlier he had said he filed a financial disclosure statement with the Federal Election Commission in which he reported US$694 million in revenue last year.

Filing such forms is mandatory for presidential hopefuls, but they are less detailed than a full-blown tax return.

After the debate, Mr Trump seemed to backtrack as he told reporters "of course I pay federal taxes." "I hate the way our government spends our money," he added. "They throw it out of the window."

For months, the Democrats have been demanding that Mr Trump release his tax returns, as Clinton and her husband Bill have done for years.

So the Democrats pounced on Mr Trump's comment about being smart when it comes to paying - or not paying - Uncle Sam.

First Lady Michelle Obama questioned the Republican candidate's character while campaigning for Mrs Clinton at La Salle University in Philadelphia on Wednesday.

"If a candidate thinks that not paying taxes makes you smart," she said, "sadly that's who that candidate really is."

At Philadelphia's Drexel University the day before Vice-President Joe Biden took a similar line of attack: "he acknowledged that he didn't pay taxes... because he's smart." "Tell that to your mothers and fathers who are breaking their neck to send you here. They're paying taxes," Mr Biden said. "It angers me. It angers me."

A recent Quinnipiac poll found that 75 per cent of Americans want Mr Trump to come clean on his taxes - 60 per cent among Republicans, 92 per cent among Democrats.

Mr Trump argues that he does not release the data because he is being audited by the Internal Revenue Service. But the IRS says being under audit does not mean someone cannot release their returns.

Mr Trump's son Donald Jr says the document is 12,000 pages long.

Some experts say Mr Trump has probably used every possible tax break available to real estate developers like him.

The US tax code provides for generous write-offs at the start of business projects, and these are particularly sweet for real estate developers and investors.

Matthew Gardner of the Institute on Taxation and Economic Policy told AFP that some analysts suspect real estate moguls regularly generate losses on real estate income to avoid paying taxes on other income - a tactic forbidden in many other industries.

"So you could see artificial losses offsetting positive income, in a way that would zero out your taxes," Mr Gardner said.

If records show that Mr Trump had been employing the tax strategy, Mr Gardner said it could reflect poorly on the billionaire's ethics.

"There is also a social responsibility element to it," he said. "When you see that someone is taking advantage of tax breaks that aren't available to everyone else - or that border on the unethical or the illegal - that says something about a person's ethical standards."

The only glimpse into how Mr Trump reports his income goes back to the 1970s, when he applied for a casino license in New Jersey.

Mr Trump paid more than US$71,000 in federal income taxes on about US$218,000 of taxable income earned from 1975 to 1977, according to the New York Times.

But thanks to deductions granted to developers and losses from partnerships, Mr Trump reported "negative income" of US$406,379 in 1978 and US$3.4 million in 1979, the Times added.

So he owed no taxes for those two years. At that time, Mr Trump said he was worth hundreds of millions of dollars.

Citizens for Tax Justice says Mr Trump may write off most of his lavish lifestyle as business expenses.

Mr Trump says he is worth around US$10 billion. Forbes magazine puts the figure at US$4.5 billion.