The Strange Tale of Trump's Taxes

During the debate, the Republican nominee seemed to confirm an accusation that he hadn’t paid any income tax, then reversed himself later.

Jonathan Ernst / Reuters

In the absence of facts, speculation will flourish. For example, as long as Donald Trump declines to release his tax returns, his opponents will offer theories for why he has failed to do so.

Trump has claimed that he cannot release his returns because he’s being audited by the IRS. (He complained Monday that he is audited every year.) He repeated that claim during the debate, even though the IRS has said that Trump is free to release his returns even if he is being audited.

Harry Reid, the Democratic senator from Nevada who in 2012 claimed (falsely, it turned out) that Mitt Romney paid no income taxes, has speculated that Trump is not as wealthy as he claims and is a “welfare king.” Romney himself has gotten in on the act, writing on Facebook, “There is only one logical explanation for Mr. Trump's refusal to release his returns: there is a bombshell in them. Given Mr. Trump's equanimity with other flaws in his history, we can only assume it's a bombshell of unusual size.”

During Monday’s first presidential debate, Hillary Clinton offered her own theory: Trump is paying no taxes. And the Republican nominee seemed in the moment to confirm it, interjecting to say it would prove he was “smart.” Here’s the exchange:

CLINTON: Third, we don't know all of his business dealings, but we have been told through investigative reporting that he owes about $650 million 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, 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.

TRUMP: That makes me smart.

CLINTON: So if he's paid zero, that means zero for troops, zero for vets, zero for schools or health. And I think probably he's not all that enthusiastic about having the rest of our country see what the real reasons are, because it must be something really important, even terrible, that he's trying to hide.

In the “spin room” after the debate, Trump suggested that he hadn’t intended to say that. Well, to specific, he said he hadn’t said it all:

REPORTER: It sounds like you admitted that you hadn’t paid federal taxes and that that was smart. Is that what you meant to say?

TRUMP: No I didn’t say that at all. If they say I didn’t it doesn’t matter.

He added,  “Of course I pay taxes.” But when NBC’s Katy Tur asked him directly whether he currently pays income tax, he declined to answer:

Deadspin put together a clip contrasting Trump’s answer in the spin room with what he actually said during the debate:

As Clinton pointed out during the debate, the last time Trump’s tax returns were made public, during the process of applying for a casino license in the 1980s, they showed he had paid no income tax. The veteran business journalist James B. Stewart recently explained why real-estate law made it possible, and perhaps even likely, that he continued to pay no income tax.

Perhaps Trump misspoke during the debate, or perhaps he committed a Kinsley gaffe—accidentally telling the truth—but his conflicting answers make it hard to know what the truth about his taxes is. There’s one very easy way he could clear up the confusion.