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During last year’s election campaign, some tax experts and financial reporters suggested that Donald Trump may not have paid any federal income taxes since the nineteen-nineties. Trump’s dogged refusal to release any of his returns contributed to this speculation. So did his state tax returns from 1995, portions of which were sent to the Times. These showed that he had used aggressive accounting tactics, taking a loss that year of more than nine hundred million dollars. Experts suggested that Trump might have exploited this huge write-off in subsequent years, too, greatly reducing or eliminating his tax liabilities.
“It is likely that Trump has not paid any income tax since 1978, or maybe a little bit in a couple of years,” David Cay Johnston, a former Times tax reporter who published a critical biography of Trump last year, told me in September.
At some point recently, somebody sent Johnston two pages from Trump’s 2005 federal tax return. “It came in the mail, over the transom,” Johnston told MSNBC’s Rachel Maddow on Tuesday night. Earlier in the evening, Maddow had created a lot of excitement by tweeting out, “BREAKING: We’ve got Trump tax returns.” What she had, courtesy of Johnston, turned out to be the front and back pages of a single 1040 form, but what these showed was undoubtedly newsworthy—although not in the way that many of the people who tuned in might have been expecting.
According to the return, which Johnston also posted on his Web site, Trump and his wife, Melania, had taxable income of about a hundred and fifty-three million dollars in 2005, and he paid about $36.5 million in federal income tax. That’s an effective tax rate of about 23.9 per cent, which is a long way from the zero per cent that many people, myself included, had speculated about last year.
Almost as noteworthy was the fact that most of the tax Trump paid was captured by the Alternative Minimum Tax, which is a backup tax designed to insure that people with a lot of deductions don’t entirely escape taxes. Because Trump took a write-down of more than a hundred million dollars in 2005, his initial tax liability was just $5.3 million. If not for the Alternative Minimum Tax, which he and other Republicans want to get rid of, his effective tax rate would have been about 3.5 per cent. Because he was liable to the A.M.T., he was forced to pay an additional thirty-one or so million dollars.
In a statement released on Tuesday night, the White House confirmed the authenticity of the partial 2005 return. “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. “That being said, Mr. Trump paid $38 million dollars even after taking into account large scale depreciation for construction, on an income of more than $150 million dollars, as well as paying 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.” (Johnston pointed out that the White House got to thirty-eight million dollars by including some Social Security taxes. The more accurate figure is $36.5 million.)
Trump’s return demonstrates why preserving the A.M.T. is essential. More immediately, it also raises the question of who leaked it. During Maddow’s show, Johnston suggested that the documents could possibly have come from Trump himself, or someone acting at his direction. “With Donald, you never know,” he said. Obviously, this is just speculation, but there are a number of reasons why the theory that someone connected to Trump may have been the leaker is far from implausible.
For one thing, the leak didn’t include the bulk of Trump’s tax return or the supporting appendices. These materials would have provided information about any loans he had taken out and details of any income he received from overseas. It is also curious that the return is for 2005, which was a particularly good year for Trump’s business. He “sold two properties, one on Manhattan’s west side and one in San Francisco, to Hong Kong investors,” a report at the Daily Beast pointed out.
As a businessman, Trump was well known for leaking material that cast him in a positive light. The revelation that he paid tens of millions of dollars in federal taxes, for this one year at least, must count as favorable to him. So, too, must the public confirmation that he earned more than a hundred and fifty million dollars. This is undoubtedly a large income—although it is still hardly enough to support his claim that he is now worth more than ten billion dollars.
The return was also leaked just when Trump needed a distraction. During the past couple of weeks, he has had to deal with news stories about his Administration’s ties to Russia. The Republican health-care plan he endorsed has run into a firestorm following the Congressional Budget Office’s assessment that the measure would raise the number of uninsured by twenty-four million over ten years. According to Gallup, his approval rating is just thirty-nine per cent. And on Wednesday, James Comey, the director of the F.B.I., is due to testify on Capitol Hill. CNN reported on Tuesday night that Comey is prepared to confirm publicly, for the first time, the existence of the agency’s investigation into possible contacts between the Trump campaign and Russia.
Finally, a stamp on the second page of the partial return that Johnston received reads “Client Copy.” This appears to indicate that this document wasn’t sent to the Internal Revenue Service but was instead retained by Trump or his accountant.
For all of these reasons, it seems reasonable to wonder whether someone connected with Trump may have been responsible for the leak. But going in this direction only raises another question: Why wasn’t the return leaked earlier, either during the campaign or during the transition? Only the person who sent the two pages to Johnston knows the answer to that question. And so far he or she hasn’t come forward.
John Cassidy has been a staff writer at The New Yorker since 1995. He also writes a column about politics, economics, and more for newyorker.com.