Donald Trump on Monday night explained away the steep losses documented on what appear to be pages of his tax returns released by the New York Times over the weekend — which may have helped him avoid taxes for two decades — as evidence of his "talent," "skill, dedication and sheer grit."
But tax experts, and the real-estate mogul's documented experience, suggest otherwise.
The nearly $916 million in losses listed on the pages from a trio of 1995 filings published by the New York Times — which Trump referred to at a campaign stop in Colorado as "alleged," but didn't deny their legitimacy in an initial statement on the documents — marks his "net operating loss" or NOL, the sum of the losses Trump's business entities, including limited liability companies, corporations and other partnerships. NOL can be used to cancel out an individual's income tax for a given year, and can be carried over from year to year.
"As a businessman and real estate developer, I have legally used the tax laws to my benefit, and to the benefit of my company, my investors, and my employees. I mean, honestly, I have brilliantly, I have brilliantly used those laws," he said in Pueblo, Colo. on Monday night.
Tax experts, however, say his potential use of the NOL loophole doesn't indicate "genius" — it's what any business owner would do.
"There's nothing morally wrong or unethical" about using NOL to offset taxes, said Dan Shaviro, a tax law professor at NYU who worked on tax reform as a Congressional aide. "But you don't have to be a genius — you could be a chimp."
While "it's perfectly normal" to use NOLs to offset a business owner's taxes, Shaviro said, a loss of more than $900 million is "unusual."
"It doesn't speak well of his business sense that he had that type of [net operating loss]. It makes him look like a fool or an incompetent in his planning," he said.
On Monday night, Trump insisted his ability to stay afloat in the early 1990s showed his "business acumen."
"I was able to use the tax laws of this country, and my business acumen, to dig out of the real estate mess — you would call it a depression — when few others were able to do what I did," he said. "In those most difficult times, when so many had their backs to the wall, I reached within myself and delivered for my company, my employees, my family and the communities where my properties existed, and I really delivered."
But IRS statistics at the time show Trump's NOL far exceeds the average amounts for even the highest earners. Those making $10 million or more filed $3.6 million in net operating losses on average, less than 4 percent of Trump's sum.
The steep NOL indicates Trump's income from his businesses came "nowhere near his loss" some years, said Philip Hackney, a professor of business tax law at Louisiana State University. It appears a considerable amount of NOL rolled over year to year after canceling out his income tax, indicating that his tax liability — and thus his income — may not have been too steep.
"If he really lost $916 million, there's nothing really untoward about that, it's only weird in terms of the large size," Hackney said. "At the time, casinos were doing fine so to have that big of a loss, it's pretty unusual."
Indeed, in the late 1980s Trump had accumulated so much debt through his businesses that New Jersey casino regulators wrote in a 1990 report on Trump's finances that "the possibility of a complete financial collapse of the Trump Organization was not out of the question." According to the New York Times, at that point he had about $3.4 billion in debt on his books, and he personally guaranteed $832 million of that.
A national recession, declining revenues from his properties and sluggish growth in gambling revenues put Trump in ever more dire financial straits in the early 1990s. Trump had to go to extreme measures in some cases just to gather the funds to service his loans, according to the Times. Trump's financials were so strained during that period that his businesses filed for bankruptcy protection four times from 1991 to 1992 according to an NBC News analysis.
Trump's critics say his foray into Atlantic City was overall harmful to the area, pointing to the fact Trump didn't pay his contractors agreed-upon sums, or in some cases stiffed them entirely during the casinos' construction — and he had to lay off thousands when his casinos eventually closed.
But without the full release of his tax returns, it's impossible to say whether Trump's portrait of his business acumen, or the one framed by his critics', is correct — in part because Trump's business empire is so vast.
Even those who worked directly on his taxes in the 1990s say they don't have a full picture of how Trump ran his businesses, or how extensive his losses ultimately were.
Ray Ciccone, an accountant who helped prepare taxes for many of Trump's casino and hotel properties in the 1980s and 1990s, said he only handled a sliver of Trump's hundreds of business interests.
"All of these different entities were being audited by these big firms, but his personal return, where all the pieces came together, were done by a somewhat small accountant in Brooklyn," Ciccone said.