Small peek at returns doesn’t show context, experts say

The New York Times’ publication of part of Donald Trump’s tax returns only revealed a thin slice of the real estate mogul’s finances — not enough to draw conclusions about how much he’s paid in taxes over the years and nothing indicating any illegal nonpayment, experts said.

The Times published three pages of state tax returns from 1995 that showed Trump reported a net loss of more than $900 million in federal taxable income, and quoted tax experts saying that large of a reported loss could have allowed Trump to not pay taxes for the next 15 years.

But without seeing his returns from those years, or returns leading up to 1995, there’s no way to determine what he paid, said Stephen Shay, a Harvard Law professor and tax expert.

“There still remains a large amount of information that would be needed — not the least of which would be the rest of his tax returns — in order to understand what to make of it,” Shay said.

But the documents indicate Trump would have been legally entitled to avoid paying taxes because of a loophole in tax code, according to Robert McIntyre, director of advocacy group Citizens For Tax Justice. In 1986, Congress passed a major revision to the tax code that attempted to shutter tax shelters by eliminating the ability of most taxpayers to use losses from real estate investments to offset taxable income.

Trump blasted the revision at the time, but McIntyre said an exemption for “real estate professionals” ultimately benefited him. While a doctor or other professional can no longer use a real estate investment to counter taxes on his earnings, someone who primarily works in real estate still can.

And while that does benefit many smaller broker-investors, the main beneficiaries are mega-investors who are able to cash in big on that benefit as well as other real estate taxation loopholes, such as property depreciation, McIntyre said.

“For years and years and years, real estate has been heavily subsidized by the government; it lets people like Trump write this off over and over again,” McIntyre said.

McIntyre said the loophole should be closed and that it would be relatively easy to do so, but he said he doubts Congress would be willing to make the change.

“As long as Congress thinks (the benefit is) going to a lot of little guys as opposed to the big guys — which is the truth — probably not,” McIntyre said.