By PETER BAKER and JESSE DRUCKER
WASHINGTON – President Donald Trump wrote off more than $100 million in business losses to reduce his federal taxes in 2005, according to forms made public Tuesday night: a rare glimpse at documents that he had refused to disclose since becoming a candidate for the nation’s highest office.
Trump paid $38 million in federal income taxes on reported income of $150 million, an effective tax rate of 25 percent, according to forms disclosed on Rachel Maddow’s MSNBC show. By claiming losses, Trump apparently saved millions of dollars in taxes that he would otherwise have owed.
The White House responded without even waiting for the show to air, issuing a statement that seemed to confirm the authenticity of the forms even as it defended Trump and assailed MSNBC for publicizing them.
“Before being elected president, Mr. Trump was one of the most successful businessmen in the world, with a responsibility to his company, his family and his employees to pay no more tax than legally required,” the statement said.
The White House described the business losses as a “large-scale depreciation for construction,” but did not elaborate. In addition to the federal income taxes in 2005, the statement said, he paid “tens of millions of dollars in other taxes, such as sales and excise taxes and employment taxes, and this illegally published return proves just that.”
Trump’s refusal to make his tax returns public during the campaign broke with decades of tradition in presidential contests and emerged as a central issue. That drumbeat has continued since he entered the White House, particularly from critics who contend that his returns may shed light on various aspects of his business practices, including whether he has done business with Russian companies and banks.
Nothing in the two pages produced Tuesday night suggested any ties with Russia. Nor did they provide much information about his businesses that was not previously known. But they showed that the vast bulk of the federal income taxes he paid in 2005, $31 million, was paid under the alternative minimum tax, which Trump wants to abolish.
That tax serves as a backstop to the ordinary income tax and is intended to prevent wealthy Americans from paying no income tax at all. Without it, Trump would have paid about $5 million in regular taxes, plus nearly $2 million in self-employment taxes, on $153 million in income in 2005.
“Trump’s return shows that he’s pushing tax changes that benefit multimillionaire heirs like him, not the middle class,” said Lily Batchelder, a tax law professor at New York University and former majority chief tax counsel for the Senate Finance Committee. “His proposal to repeal the AMT would have slashed his own tax burden by $31 million, and his income tax rate would be lower than the average rate paid by families earning $75,000 to $100,000.”
Edward Kleinbard, a professor of tax law at the University of Southern California, said, “It’s disturbing that he is pushing to eliminate the only tax that really bit him in that year.”
The White House castigated MSNBC for reporting on Trump’s taxes.
“You know you are desperate for ratings when you are willing to violate the law to push a story about two pages of tax returns from over a decade ago,” its statement said. “The dishonest media can continue to make this part of their agenda, while the president will focus on his, which includes tax reform that will benefit all Americans.”
The president’s son Donald Trump Jr. suggested that the disclosure only demonstrated his father’s business acumen. “Thank you Rachel Maddow for proving to your #Trump hating followers how successful @realdonaldtrump is & that he paid $40mm in taxes!” he wrote on Twitter.
Democrats pounced on Tuesday night’s report, arguing that the White House’s decision to release details of Trump’s 2005 taxes before Maddow’s show undercut his past refusal to release any such information.
“If they can release some of the information, they can release all of the information,” Zac Petkanas, a senior adviser to the Democratic National Committee, said in a statement. “The only reason not to release his returns is to hide what’s in them, such as financial connections with Russian oligarchs and the Kremlin.”
The tax forms were sent to David Cay Johnston, a former New York Times reporter who covered tax policy for years and has written a book on Trump. Appearing with Maddow, he said he had received the forms “over the transom” at his home and did not know who had sent them. He suggested that they might even have been sent by Trump himself. Because he did not solicit the forms, Johnston said it was not illegal to receive them.
The forms showed that Trump made $67 million in real estate royalties, $42 million in business income, $32 million in capital gains, $9 million in taxable interest and $998,599 in salary in 2005, for a total of nearly $153 million. After writing off $103 million, he reported adjusted gross income of nearly $49 million. In the end, he had to write a check for $2,450,597, including penalties and interest for late payment.
In October, The Times published three pages of Trump’s 1995 tax returns, which showed a $916 million deduction that could have allowed him to legally avoid paying federal income taxes for up to 18 years. The forms disclosed Tuesday do not say whether the $103 million in losses were left over from that 1995 loss.