WASHINGTON — Donald Trump and his supporters rushed Sunday to defend the Republican nominee following revelations that he may not have paid income taxes for 18 years, a new disclosure that shook the presidential race and capped an extraordinarily damaging week for Trump’s campaign.
News that Trump could have spent nearly two decades without paying income taxes — largely because he reported a loss of nearly $1 billion in the mid-1990s — threatens to puncture one of the core arguments of his campaign: that he is a successful businessman who could do for the country what he has done for his businesses.
And while his supporters have been extremely loyal to Trump, the idea that he hasn’t contributed to the federal coffers for so long could damage the notion that he fights for the little guy.
Trump’s campaign launched a vigorous defense of his business practices, saying he wasn’t breaking any laws but instead was helping get his business back on track.
“He’s a genius — absolute genius,” former New York City mayor Rudy Giuliani said on ABC’s “This Week,” saying the word over and over again. “This was a perfectly legal application of the tax code, and he would’ve been a fool not to take advantage of it.”
Democrats quickly pounced, saying that Trump’s business record — and his lack of paying taxes — should be deeply troubling to voters.
“You’ve got the middle-class people working longer hours for low wages — they pay their taxes, they support their schools, they support their infrastructure, they support the military,” Senator Bernie Sanders said on CNN’s “State of the Union.” “Trump goes around and says: ‘Hey, I’m worth billions! I’m a successful businessman! And I don’t pay any taxes. But you — you make 15 bucks an hour — you pay the taxes, not me.’ ”
News of Trump’s tax history came late Saturday night, when The New York Times reported that Trump declared a loss of $916 million on his income tax forms in 1995. That loss could have been used to avoid paying taxes for up to 18 years, according to the report, which was based on several pages of Trump’s taxes that were anonymously sent to a Times reporter and later confirmed as authentic by Trump’s former accountant.
Trump would have been taking advantage of tax laws that allow him to apply such losses for the prior three years, as well as the next 15 years.
It reflected a period when he was struggling mightily with his Atlantic City casinos, as well as his Trump Shuttle airline. Writing off the losses from those businesses helped him avoid the taxes.
“From a tax standpoint, it was a very good deal,” Trump told the Globe in a May interview about the Trump Shuttle failure.
But two subsequent bankruptcies — which Trump-owned businesses filed in 2004 and 2009 — could have significantly lowered the benefits of the $916 million in losses that he declared in 1995, Boston-based tax attorney Morris Robinson said in an interview Sunday.
Trump would have had to balance the 1995 losses against the debt that was written off in his bankruptcies. Doing so — particularly with the magnitude that Trump was dealing with — could have triggered the audit that Trump says he is now under.
“It’s very possible that the audit that is happening in 2016 may be dealing with some of these issues that are going back 20 years,” Robinson said. “It’s a complicated, drawn-out process. There’s a lot involved, and when you have bankruptcies, some before the loss, some after the loss, it adds another layer of complication.”
Trump’s campaign released a statement late Saturday that did not dispute any of the facts in the Times story, complaining only that the documents were published without permission.
“The only news here is that the more than 20-year-old alleged tax document was illegally obtained,” the statement read.
“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 read. “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, along with very substantial charitable contributions.”
Trump himself responded using one of his favorite platforms, logging onto Twitter in the early morning hours.
“I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them. #failing@nytimes,” he tweeted at 7:22 a.m.
A few minutes later, he added: “I have created tens of thousands of jobs and will bring back great American prosperity. Hillary has only created jobs at the FBI and DOJ!”
Trump so far has refused to release any of his income tax records, bucking a tradition that almost every presidential nominee has followed since the 1970s and ignoring calls from many Republicans that he release his returns. Trump has also pledged numerous times to release his tax returns but has not followed through.
He has said he is under audit from the IRS — but that does not restrict him from releasing them. In fact, President Richard M. Nixon released his tax returns while under audit in 1973.
The lack of disclosure has provided an opening for Hillary Clinton, whose own campaign has been stymied by her lack of transparency about her e-mails. But she has released her full tax returns dating to 1977, and she has made an issue out of Trump not following suit.
During the debate last week, she speculated that Trump has not been paying federal income taxes.
“That makes me smart,” Trump said in response.
After the debate, Trump claimed he was speaking hypothetically.
“What she said is, ‘Maybe you paid no taxes.’ I said, ‘Well, that would make me very smart,’ ” Trump said on Fox News.
A Trump campaign spokeswoman did not respond to the Globe Sunday afternoon when asked whether Trump could say definitively that he had paid federal income taxes in each of the last five years — or when he intended to release his tax returns.
One reason many have assumed Trump is reluctant is that he, in fact, pays very little by taking advantage of the many tax breaks offered to real estate developers. Records from the New Jersey Division of Gaming Control and the Casino Control Commission have shown that Trump paid little to nothing in federal taxes in 1978 and 1979, as well as 1991 and 1993.
“I fight very hard to pay as little tax as possible,” Trump told ABC News in May.
He has said his records are “none of your business” and said voters simply don’t care about them. His son, Donald Trump Jr., said last month the returns were too voluminous for voters to digest and releasing his father’s tax files would distract attention from his campaign message.
The release of Trump’s returns would help determine several other lingering questions, beyond simply what taxes he might have paid. The return could show potential financial entanglements he might have with countries he would be negotiating with as president, for example. It could also provide indications of his net worth, as well as whether he is making the charitable donations that he has long claimed but so far have gone unproven.
The tax forms obtained by the Times — which were the first page of Trump’s state filings in Connecticut, New Jersey, and New York — did not include such information.
About 45 percent of Americans didn’t pay income taxes in 2015, according to an estimate from the Tax Policy Center. The vast majority of those not paying taxes are poor and elderly; 99 percent of those making more than $1 million paid income taxes, according to a 2011 study from the Tax Policy Center.
Trump, in fact, has repeatedly decried that half the country is not paying taxes.
“You do have a problem because half of the people don’t pay any tax,” Trump said on Fox News in 2011, decrying President Obama’s proposal to raise taxes on the wealthy. “It just hit the 50 percent mark. Fifty percent of the people are paying no tax!”
He did not mention whether he himself was among the 50 percent not paying taxes.