Why Trump Won’t Release His Taxes — The New York Times reports on how Donald Trump was able to parlay business losses into not paying federal income taxes.
Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by The New York Times show.
The 1995 tax records, never before disclosed, reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived 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.
Tax experts hired by The Times to analyze Mr. Trump’s 1995 records said that tax rules especially advantageous to wealthy filers would have allowed Mr. Trump to use his $916 million loss to cancel out an equivalent amount of taxable income over an 18-year period.
Although Mr. Trump’s taxable income in subsequent years is as yet unknown, a $916 million loss in 1995 would have been large enough to wipe out more than $50 million a year in taxable income over 18 years.
The $916 million loss certainly could have eliminated any federal income taxes Mr. Trump otherwise would have owed on the $50,000 to $100,000 he was paid for each episode of “The Apprentice,” or the roughly $45 million he was paid between 1995 and 2009 when he was chairman or chief executive of the publicly traded company he created to assume ownership of his troubled Atlantic City casinos. Ordinary investors in the new company, meanwhile, saw the value of their shares plunge to 17 cents from $35.50, while scores of contractors went unpaid for work on Mr. Trump’s casinos and casino bondholders received pennies on the dollar.
“He has a vast benefit from his destruction” in the early 1990s, said one of the experts, Joel Rosenfeld, an assistant professor at New York University’s Schack Institute of Real Estate. Mr. Rosenfeld offered this description of what he would advise a client who came to him with a tax return like Mr. Trump’s: “Do you realize you can create $916 million in income without paying a nickel in taxes?”
Mr. Trump declined to comment on the documents. Instead, the campaign released a statement that neither challenged nor confirmed the $916 million loss.
“Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required,” the statement said. “That being said, Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes.”
The statement continued, “Mr. Trump knows the tax code far better than anyone who has ever run for President and he is the only one that knows how to fix it.”
Separately, a lawyer for Mr. Trump, Marc E. Kasowitz, emailed a letter to The Times arguing that publication of the records is illegal because Mr. Trump has not authorized the disclosure of any of his tax returns. Mr. Kasowitz threatened “prompt initiation of appropriate legal action.”
Mr. Trump’s refusal to make his tax returns public — breaking with decades of tradition in presidential contests — has emerged as a central issue in the campaign, with a majority of voters saying he should release them. Mr. Trump has declined to do so, and has said he is being audited by the Internal Revenue Service.
At last Monday’s presidential debate, when Hillary Clinton suggested Mr. Trump was refusing to release his tax returns so voters would not know “he’s paid nothing in federal taxes,” and when she also pointed out that Mr. Trump had once revealed to casino regulators that he paid no federal income taxes in the late 1970s, Mr. Trump retorted, “That makes me smart.”
The tax experts consulted by The Times said nothing in the 1995 documents suggested any wrongdoing by Mr. Trump, even if the extraordinary size of the loss he declared would have probably attracted extra scrutiny from I.R.S. examiners. “The I.R.S., when they see a negative $916 million, that has to pop out,” Mr. Rosenfeld said.
The documents examined by The Times represent a small fraction of the voluminous tax returns Mr. Trump would have filed in 1995.
The documents consisted of three pages from what appeared to be Mr. Trump’s 1995 tax returns. The pages were mailed last month to Susanne Craig, a reporter at The Times who has written about Mr. Trump’s finances. The documents were the first page of a New York State resident income tax return, the first page of a New Jersey nonresident tax return and the first page of a Connecticut nonresident tax return. Each page bore the names and Social Security numbers of Mr. Trump and Marla Maples, his wife at the time. Only the New Jersey form had what appeared to be their signatures.
The three documents arrived by mail at The Times with a postmark indicating they had been sent from New York City. The return address claimed the envelope had been sent from Trump Tower.
On Wednesday, The Times presented the tax documents to Jack Mitnick, a lawyer and certified public accountant who handled Mr. Trump’s tax matters for more than 30 years, until 1996. Mr. Mitnick was listed as the preparer on the New Jersey tax form.
A flaw in the tax software program he used at the time prevented him from being able to print a nine-figure loss on Mr. Trump’s New York return, he said. So, for example, the loss of “-915,729,293” on Line 18 of the return printed out as “5,729,293.” As a result, Mr. Mitnick recalled, he had to use his typewriter to manually add the “-91,” thus explaining why the first two digits appeared to be in a different font and were slightly misaligned from the following seven digits.
“This is legit,” he said, stabbing a finger into the document.
Because the documents sent to The Times did not include any pages from Mr. Trump’s 1995 federal tax return, it is impossible to determine how much he may have donated to charity that year. The state documents do show, though, that Mr. Trump declined the opportunity to contribute to the New Jersey Vietnam Veterans’ Memorial Fund, the New Jersey Wildlife Conservation Fund or the Children’s Trust Fund. He also declined to contribute $1 toward public financing of New Jersey’s elections for governor.
The tax documents also do not shed any light on Mr. Trump’s claimed net worth of about $2 billion at that time. This is because the complex calculations of business deductions that produced a tax loss of $916 million are a separate matter from how Mr. Trump valued his assets, the tax experts said.
Nor does the $916 million loss suggest that Mr. Trump was insolvent or effectively bankrupt in 1995. The cash flow generated by his various businesses that year was more than enough to service his various debts.
But fragmentary as they are, the documents nonetheless provide new insight into Mr. Trump’s finances, a subject of intense scrutiny given Mr. Trump’s emphasis on his business record during the presidential campaign.
The documents show, for example, that while Mr. Trump reported $7.4 million in interest income in 1995, he made only $6,108 in wages, salaries and tips. They also suggest Mr. Trump took full advantage of generous tax loopholes specifically available to commercial real estate developers to claim a $15.8 million loss in 1995 on his real estate holdings and partnerships.
But the most important revelation from the 1995 tax documents is just how much Mr. Trump may have benefited from a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.
The provision, known as net operating loss, or N.O.L., allows a dizzying array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of men like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.
Better still, if the losses are big enough, they can cancel out taxable income earned in other years. Under I.R.S. rules in 1995, net operating losses could be used to wipe out taxable income earned in the three years before and the 15 years after the loss. (The effect of net operating losses on state income taxes varies, depending on each state’s tax regime.)
The tax experts consulted by The Times said the $916 million net operating loss declared by Mr. Trump in 1995 almost certainly included large net operating losses carried forward from the early 1990s, when most of Mr. Trump’s key holdings were hemorrhaging money. Indeed, by 1990, his entire business empire was on the verge of collapse. In a few short years, he had amassed $3.4 billion in debt — personally guaranteeing $832 million of it — to assemble a portfolio that included three casinos and a hotel in Atlantic City, the Plaza Hotel in Manhattan, an airline and a huge yacht.
Reports that year by New Jersey casino regulators gave glimpses of the balance sheet carnage. The Trump Taj Mahal casino reported a $25.5 million net loss during its first six months of 1990; the Trump’s Castle casino lost $43.5 million for the year. His airline, Trump Shuttle, lost $34.5 million during just the first six months of that year.
“Simply put, the organization is in dire financial straits,” the casino regulators concluded.
Reports by New Jersey’s casino regulators strongly suggested that Mr. Trump had claimed large net operating losses on his taxes in the early 1990s. Their reports, for example, revealed that Mr. Trump had carried forward net operating losses in both 1991 and 1993. What’s more, the reports said the losses he claimed were large enough to virtually cancel out any taxes he might owe on the millions of dollars of debt that was being forgiven by his creditors. (The I.R.S. considers forgiven debt to be taxable income.)
But crucially, the casino regulators redacted the precise size of the net operating losses in the public versions of their reports. Two former New Jersey officials, who were privy to the unredacted documents, could not recall the precise size of the numbers, but said they were substantial.
Politico, which previously reported that Mr. Trump most likely paid no income taxes in 1991 and 1993 based on the casino commission’s description of his net operating losses, asked Mr. Trump to comment. “Welcome to the real estate business,” he replied in an email.
Now, thanks to Mr. Trump’s 1995 tax records, the degree to which he spun all those years of red ink into tax write-off gold may finally be apparent.
Mr. Mitnick, the lawyer and accountant, was the person Mr. Trump leaned on most to do the spinning. Mr. Mitnick worked for a small Long Island accounting firm that specialized in handling tax issues for wealthy New York real estate families. He had long handled tax matters for Mr. Trump’s father, Fred C. Trump, and he said he began doing Donald Trump’s taxes after Mr. Trump turned 18.
In an interview on Wednesday, Mr. Mitnick said he could not divulge details of Mr. Trump’s finances without Mr. Trump’s consent. But he did talk about Mr. Trump’s approaches to taxes, and he contrasted Fred Trump’s attention to detail with what he described as Mr. Trump’s brash and undisciplined style. He recalled, for example, that when Donald and Ivana Trump came in each year to sign their tax forms, it was almost always Ivana who asked more questions.
But if Mr. Trump lacked a sophisticated understanding of the tax code, and if he rarely showed any interest in the details behind various tax strategies, Mr. Mitnick said he clearly grasped the critical role taxes would play in helping him build wealth. “He knew we could use the tax code to protect him,” Mr. Mitnick said.
According to Mr. Mitnick, Mr. Trump’s use of net operating losses was no different from that of his other wealthy clients. “This may have had a couple extra digits compared to someone else’s operation, but they all benefited in the same way,” he said, pointing to the $916 million loss on Mr. Trump’s tax returns.
In “The Art of the Deal,” his 1987 best-selling book, Mr. Trump referred to Mr. Mitnick as “my accountant” — although he misspelled his name. Mr. Trump described consulting with Mr. Mitnick on the tax implications of deals he was contemplating and seeking his advice on how new federal tax regulations might affect real estate write-offs.
Mr. Mitnick, though, said there were times when even he, for all his years helping wealthy New Yorkers navigate the tax code, found it difficult to face the incongruity of his work for Mr. Trump. He felt keenly aware that Mr. Trump was living a life of unimaginable luxury thanks in part to Mr. Mitnick’s ability to relieve him of the burden of paying taxes like everyone else.
“Here the guy was building incredible net worth and not paying tax on it,” he said.
Now Is The Time — John Nichols in The Nation on expressing solidarity with Arab-Americans.
The ugly political climate of 2016 has made this a rough year for the Arab-American community.
Donald Trump’s cruel and unusual campaign has had many targets. But he has been particularly vile in his targeting of Muslims and immigrants from Middle Eastern countries.
By openly disregarding constitutional provisions that were designed to guard against religious tests and to guarantee equal protection under the law for all Americans, Trump has mainstreamed deliberate ignorance and crude bigotry. He has called for banning Muslim immigration. He had stoked resentment against Syrian refugees of all backgrounds. He has entertained the idea of compiling a national database of Muslims living in the United States. And he has opened a discussion about surveillance of houses of worship with suggestions that “we have to be very strong in terms of looking at the mosques.”
The Arab-American community is diverse. Arab Americans are Muslims and Christians; they are religious and secular; they trace their roots to many countries; some are recent immigrants but many have family histories in the US that extend back as far as those of the Republican presidential nominee. What they have in common is a shared sense of having been stereotyped and targeted unfairly in this election campaign.
Arab-Americans of all backgrounds say they feel frustrated and “exhausted” after a year of having to defend themselves from Trump’s attacks. “I was born, raised in America,” Ron Amen, a member of the large and well-established Arab-American community in Dearborn, Michigan, told NPR in a poignant discussion of the campaign. “I served this country in the military. I served this country as a police officer for 32 years. I don’t know what else I would have to prove to people like Mr. Trump that I’m not a threat to this country.
It is by now well understood that Trump’s rhetoric has fostered a climate of fear and intimidation that is not just divisive. It is, as Congressman Keith Ellison and others have suggested, a source of understandable anxiety and fear for those who Trump targets.
“He’s whipping up hatred to scapegoat a minority religious group, which has some very dangerous historic precedents,” Ellison explained last year. “I mean, it’s the kind of behavior, it’s classic demagoguery, and you know, he’s going to get somebody hurt.”
In divided and dangerous times, it is vital for rational and responsible Americans to speak up. It is important to criticize Trump when he makes bigoted statements. It is also important to express solidarity with individuals and groups that are targeted by Trump — and with organizations that push back against the politicians who stoke fear and resentment.
This is about much more than politics. This is about being on the right side of history.
That is why it mattered, a lot, when Democratic National Committee interim chair Donna Brazile on Friday joined Dr. James Zogby (the co-founder and president of the Arab American Institute who was appointed by President Obama to the United States Commission on International Religious Freedom in 2013 and who chairs the Democratic National Committee’s ethnic council) in issuing a extended statement of solidarity with the American-Arab Anti-Discrimination Committee:
The Democratic Party shares the mission of the American-Arab Anti-Discrimination Committee (ADC). We stand for diversity, inclusivity, freedom of religion, and we celebrate the contributions of hardworking immigrants and Americans of all ethnicities. This year, we’ve seen a troubling rise in hateful and divisive political rhetoric aimed at Muslim Americans and immigrants, so it’s crucial for those of us who believe that our diversity is our strength to aggressively defend victims of discrimination, and to warmly welcome people of every background into our communities.
Issued to celebrate the annual convention of the ADC, a major gathering of Arab Americans and their allies, the statement declared that “the Democratic Party is proud to stand with our Arab American brothers and sisters. We look forward to working hand-in-hand to defend the rights of Arab Americans, to end stereotyping and discrimination, and to fight for the causes of peace, prosperity and security for all.”
Democrats, and responsible Republicans, have hailed the work of the ADC before.
But these words represent a welcome and necessary show of solidarity that merits notation and celebration. Because in times like these, “solidarity” must become the watchword of a more humane and progressive politics.
Havana Hustle — Jon Lee Anderson in The New Yorker on Donald Trump’s skirting the embargo.
In 1998, a decade after his ghostwritten memoir, “The Art of the Deal,” made him a household name in the United States, the New York real-estate developer Donald Trump sent a team of consultants to Cuba to sniff out new business opportunities. According to a story in the current issue of Newsweek, Trump paid the expenses for the consultants, who worked for the Seven Arrows Investment and Development Corporation. Their bill came to $68,551.88.
The payment was illegal, and was also covered up. Documents obtained by Newsweek suggest that Trump’s executives knew as much, and sought to conceal the payments by making it appear that they had gone to a charitable effort. Clearly, Trump’s company, then called Trump Hotels & Casino Resorts, knowingly violated the long-standing U.S. trade embargo with Cuba, part of the Trading with the Enemy Act—which, as it happens, is still on the books today, despite President Obama’s restoration of relations with Cuba, in December, 2014. The embargo is a complex bundle of laws and prohibitions that have accrued over a half century and that can only be done away with by a majority vote in Congress, which seems unlikely to happen anytime soon.
If Trump’s violation of the act had been discovered earlier, the developer could have been sentenced to up to ten years in prison and fined as much as a million dollars. In 2004, the U.S. imposed an undisclosed fine on the Spanish airline Iberia for transporting Cuban goods through the United States. In 2005, an American businessman pleaded guilty to violating the embargo by selling water-purification supplies to Cuba. He and two of his associates, who pleaded guilty a year earlier, were given probation sentences, after years in court. The statute of limitations on Trump’s venture into Cuba has now run out, and he has escaped the likelihood of criminal prosecution. But by compounding the growing perception that he is an inveterate cheat and liar, it could further damage his chances of winning the Presidency on November 8th.
Trump not only violated the embargo but also took ostentatiously hypocritical positions on it. In November, 1999, less than a year after he sent the consultants to Cuba, Trump flirted with launching his first Presidential bid, as the candidate of the Reform Party, at an event hosted by the anti-Castro Cuban American National Foundation, in Miami. Trump swore to his audience that he would never do business in Cuba until Fidel Castro, whom he called “a murderer” and “a bad guy in every respect,” was dead and gone. He added that he thought the embargo was a good thing because money spent on the island went to Castro, not to the people of Cuba. Trump received big applause for his expressions of solidarity with Cuban-Americans, and even cracked a joke that he’d oversee their victory over Communism as either “the greatest developer in the country or the greatest President you’ve had in a long time.”
During the Presidential race, Trump has altered course on Cuba. Last year, during the primary campaign, Trump said that he supported government efforts to restore relations with the island. Then, at a Miami rally two weeks ago, Trump claimed that Obama should have secured better terms in negotiations with Cuba, and that “unless the Castro regime meets our demands,” he would reverse Obama’s executive orders. Among his demands, Trump said, were “religious and political freedom for the Cuban people and the freeing of political prisoners.” The change in position received little notice at the time because of another statement Trump made at that rally: that Hillary Clinton’s bodyguards should disarm themselves, “to see what happens.”
The End of Automotive Styling — Ian Bogost on the death of the sexy car.
The automobile has become the enemy of progress. It’s an unlikely outcome, from the vantage point of the 20th century. Not that long ago, cars were still unequivocal symbols of personal power—especially in America, where basic mobility is often impossible without one.
But now cars are increasingly uncool. For one part, they’re a major source of carbon emissions, and thereby a principal cause of global warming. For another part, they’re expensive to own and operate, especially in big cities. The high-status technology, media, and finance professionals who live in cities like New York and San Francisco and the like can get around by public transit, on foot, and by bike. Elsewhere, the recession stifled car purchases and use among all demographics. Millennials just entering the workforce, who might have started buying cars had the economy been better, are more likely to have found and then acclimated to other options—including ride-hailing services like Uber.
Then there’s the robocars. Once a wild-west, self-driving are cars gaining momentum. Google has been driving robotic Lexus SUVs in Mountain View for years. Uber has begun a working trial of an autonomous fleet in Pittsburgh. Tesla has installed partially-autonomous “autopilot” in its cars for years. And finally (thanks partially to Tesla autopilot’s questionable safety record) the U.S. government has issued guidelines for autonomous vehicles, along with an endorsement of their promise for the future.
Autonomous cars are destined to become fleet cars. Services like Uber and Lyft depend on the idea that riders don’t want to own cars, but only to rent them when needed. Making the cars drive themselves removes the need for people to operate them, too—thereby snuffing out all the human pleasure associated with driving. While still hypothetical, Google’s autonomous cars will likely work the same way. Like many technology businesses, Google and Uber are based on the premise that people don’t want to own anything—whether a word processor or an automobile—but only to borrow them on-demand. Leasing a car feels much the same as owning one. The lessee is still responsible for it, still garages it, still winces at dings on its surface. But nowadays, a different kind of lease has become common: the transient usage of software-driven services that appear and disappear at whim. Google Docs leaves much to be desired, but who cares when it’s free and easy to use? A particular Uber ride might be more or less unpleasant than another, but soon enough it will drive away never to be seen again. Goods become tools, and temporary ones at that. But yet, people do care about cars that way. Or at least, they did. As automobiles become more like online software services, travelers will become less attached to their aesthetic properties. As I’ve written about before, Tesla has already begun preparing car culture for the end of the automobile as an object of desire. The Model S is a supercar that’s as stylish as a pair of Dockers. Google’s prototype for a cute pod of a self-driving car does something similar. Uber’s early autonomous cars are about as unsexy as they come: a fleet of Ford Fusions topped with big, LIDAR hats—hardly the kind of vehicle that could adorn posters on adolescent bedroom walls. As my colleague Megan Garber put it, cars like these take the automotive logic of the 20th century— “cars as luxury, cars as freedom, cars as sex”—and flip it on its head. Now vehicles are becoming a commodity and a service. What’s less sexy than a car a bunch of other people have also recently occupied?
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McLaren is best known for its Formula 1 pedigree, although the company also makes million-dollar road cars for the very wealthy. In recent years, the company has also expanded into design consulting and parts, strengths it developed thanks to the unforgiving conditions of Formula 1 racing. Estimated to be worth about $2 billion, Apple could easily snap up the company with some of its $200 billion or so in cash reserves.
Apple, meanwhile, has reportedly been developing its own electric and/or autonomous vehicle program. As with everything Apple, the company has been secretive about its plans. One thing we do seem to know about “Project Titan,” as the Apple project was code-named, is that it recently underwent a dramatic restructuring, including a number of layoffs. All is not well in Apple’s garage.That makes the possibility of an Apple partnership with automakers seem more likely. McLaren quickly denied the rumors of investment or takeover, but whether or not a partnership or acquisition will ever really happen is less interesting than what it means that the public would find one so interesting in the first place.
Some of those affinities are obvious. McLaren has been working on lighter and more efficient electric drivetrains, a feature of obvious interest to any future automaker. And Apple’s reported shift from developing a complete autonomous car to a provider of technologies for other manufacturers seems to correspond with McLaren’s strategy to use Formula 1 as a testbed for more mainstream applications. Other Apple technologies, like the iPhone in-car entertainment system known as CarPlay, offer paradigmatic examples for potential operational infrastructures for future automobiles. The “Intel Inside” of future automobiles.
But others are less obvious. In truth, the appeal of Apple’s hypothetical absorption of McLaren is most easily explained from the gut or the crotch rather than from the head or the hands. No matter the number of analysts poring over the strategic benefits of a future set of Apple-branded components and subsystems derived from McLaren inventions and installed in ordinary Fords and Hyundais, the idea of an Apple acquisition of McLaren evokes one singular and undeniable image: a sleek, dark, and perfect Apple supercar.
I can imagine it in my mind’s eye. Black or silver (or rose gold, of course), the Mac (forgive me) is a vessel where the seam between glass and metal cannot be distinguished. When a nearby owner is recognized, the gentle sigh of tamed hydraulics acknowledges him or her, engaging some heretofore unthought car door entry paradigm. Its engine hums low and bright, powerful yet winsome. If the automobile has always been a symbol of power and freedom and sex, and if everyone wants nothing more than to stroke an iPhone until it sublimates pleasure and access—just imagine how good it would feel to grip the tightly stitched wheel of an Apple-McLaren love child.
But yet, we already know that no human will soon grip any wheel, let alone that of a supercar. And so the truth eventually creeps into the dream. There will be no Apple supercar, because cars themselves are being dismantled and reinstalled as technology services.
McLaren, for example, has already spun off a consulting group called McLaren Applied Technologies, which domesticates the wild Formula 1 machine into more practical affairs: data analysis, advanced control systems, data-driven intelligent products. The Formula 1 racer inevitably must settle down into the workaday necessity of, say, “facilitating analysis of human and machine performance through advanced data analytics, algorithms and prediction.”
It’s the supercar equivalent of your favorite punk band selling its signature lick for an adult diapers jingle. The very idea of a supercar—and to some extent, of an ordinary one—is excess. A singular human being whose feet and hands pilot two tons of metal and rubber and leather and explosives from the garage to the supermarket.And yet, that is just the function that automobiles are now abandoning. Instead, cars are becoming leased appliances, made and sold with efficiency to suppliers intent on renting them out for minutes at a time to customers who would rather forget ever having been inside them. Nothing could be less sensual than the boring universe of business-to-business fleet sales—except, maybe, the boring universe of business-to-business fleet-sales component supply.Cars once lived among us, their clear-coated steel body moldings and tinted glass windows offering counterpart to human flesh and tailored textile. But soon, they will live on the inside of technology services—as components and subsystems, just as do the microprocessors and batteries and GPS units and accelerometers that drive our smartphones. Automobiles are doomed and destined to become mere parts infrastructures for worldly conveyance. There they won’t even be seen, let alone desired. What kind of freak lusts for microprocessors?The dream of Apple’s subsumption of McLaren is a collective final breath of the automotive dream. And like that death rattle, it is both terrifying and beautiful. Even near its end, the automobile still has its wits about it. The memory of speed and power and control persists, for a moment anyway, just before it turns into yet another borrowed appliance, to be used and also forgotten.