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Trump campaign reels after disclosure of 1995 tax returns

The Washington Post logoThe Washington Post 10/2/2016 Philip Rucker, Jenna Johnson
Donald Trump is seen above the floor of the New York Stock Exchange in 1995 after taking his flagship Trump Plaza Casino public. © Kathy Willens/Associated Press Donald Trump is seen above the floor of the New York Stock Exchange in 1995 after taking his flagship Trump Plaza Casino public.

Donald Trump’s campaign, reeling Sunday after a report that the business mogul may not have paid taxes for as many as 18 years after declaring a $916 million loss on his 1995 returns, mounted a vigorous defense by calling the revelation proof of the Republican presidential nominee’s “genius.”

A New York Times report late Saturday showed how Trump had used byzantine tax laws to cancel out income taxes after his real estate and casino empire nearly collapsed in the early 1990s, and the Times calculated that the resulting deductions may have allowed him to pay no federal income taxes for 18 years.

Former New York mayor Rudy Giuliani and New Jersey Gov. Chris Christie, Trump’s leading surrogates, fanned out across the Sunday political talk shows to defend their candidate — but they did not dispute the Times’s findings, nor has Trump’s campaign.

“He’s a genius — absolute genius,” Giuliani said on ABC’s “This Week.” “This was a perfectly legal application of the tax code, and he would’ve been a fool not to take advantage of it.”

The revelation about Trump’s taxes capped perhaps the most difficult week of his general election campaign — from his shaky debate performance and drop in the polls to his feud with a former Latina beauty queen over her weight gain and erratic 3 a.m. tweets Friday, to his unfounded speculation in a rambling speech Saturday night that Democratic nominee Hillary Clinton may have cheated on her husband.

“What we’re seeing is somebody who’s blowing himself apart in real time,” said Peter Wehner, a strategist and scholar who served in the administrations of the last three Republican presidents. “It’s a pretty extraordinary thing to see. It’s a political death wish, as if at some deep level he doesn’t want to be president.”

Wehner added, “It’s gnawing on him that he could become what he has contempt for, and that is a loser.”

Mo Elleithee, a Democratic strategist who runs Georgetown University’s Institute of Politics and Public Service, said, “Political operatives and strategists are going to study this week for generations as the textbook case of self-sabotage.”

The Times, which obtained Trump’s 1995 tax records, reported that Trump may have taken advantage of special rules for real estate investors that legally allowed him to use his $916 million loss to offset $50 million a year in future taxable income for as many as 18 years.

Trump’s year-by-year returns would show how much he paid in federal income taxes, but he has refused to release them. For decades now, all presidential nominees have released years worth of tax returns, including Clinton.

The Clinton campaign and its supporters moved Sunday to exploit the tax discovery to underscore their central argument against Trump, which is that he is unqualified and temperamentally unfit to be president, and to argue that he took advantage of rules that ordinary workers cannot.

Robby Mook, Clinton’s campaign manager, said Trump has “spun out of control.”

“We see Donald Trump is having to defend the fact that he may not have paid taxes for 20 years, which is something most Americans don’t have the option to do,” Mook said on NBC’s “Meet the Press.”

Senate Minority Leader Harry M. Reid (D-Nev.), who has sparred with Trump over his taxes and business record, issued a caustic statement on Sunday about the Republican nominee.

“Trump is a billion-dollar loser who won’t release his taxes because they’ll expose him as a spoiled, rich brat who lost the millions he inherited from his father,” Reid said. He went on to call Trump “a racist, incompetent failure who managed to lose a billion dollars in a boom year.”

Trump’s surrogates offered a different assessment. Giuliani and Christie each used the word “genius” to describe Trump’s management of his taxes.

Christie, who chairs Trump’s presidential transition project, proclaimed on “Fox News Sunday” that “this is actually a very, very good story for Donald Trump.”

“What it shows is what an absolute mess the federal tax code is, and that’s why Donald Trump is the person best positioned to fix it,” the governor said. “There’s no one who’s showed more genius in their way to move around the tax code.”

Asked by Fox anchor Chris Wallace whether there were any apologies for Trump’s apparent avoidance of paying taxes, as reported by the Times, Christie was unrepentant.

“Oh, for gosh sakes, no apologies for complying with the law, and taking a bow for the fact that he has said well before this story came out that we should change the tax laws,” Christie said.

Trump’s tax plan — which would cut rates for high-income people like him and eliminate the “carried interest” loophole that benefits hedge fund managers, among other things — does not address the rule he may have taken advantage of. He and his campaign have not yet said whether Trump plans to eliminate or change it.

Giuliani had a fiery exchange with host Jake Tapper on CNN’s “State of the Union,” in which the former mayor argued that Trump has a fiduciary responsibility to exploit every tax advantage available to him. The two men often shouted over each other, with Giuliani insisting that Trump could have been sued if he had not applied his 1995 loss to future tax returns.

“There are not very many smart businessmen who don’t take advantage of the tax — legal tax laws that are there,” Giuliani said. “And if they are, then they’re not very good businessmen, and no one wants to go into business with them and they don’t have very good lawyers, and they don’t have very good accountants.”

Central to Trump’s candidacy has been the idea of him as a successful businessman. Political analysts said the revelation that he declared a nearly $1 billion loss when his real estate company almost collapsed threatens to undercut his credibility in business.

“People can look at this little bit of evidence and now question his business acumen,” Elleithee said. Secondly, he said, it is an example of Trump benefitting personally from a system he has railed against. “His whole argument is that there are too many people in the establishment that are using the system to screw the little guy.”

Clinton’s supporters held up Trump’s apparent ma­nipu­la­tion of tax laws to avoid paying taxes as an example of inherent unfairness in the tax code, which allows billionaires to use loopholes that they said were unavailable to ordinary workers.

Sen. Bernie Sanders (I-Vt.) said on CNN that this is “exactly why so many millions of Americans are frustrated, they’re angry, they’re disgusted.”

“You’ve got the middle-class people working longer hours for low wages — they pay their taxes, they support their schools, they support their infrastructure, they support the military,” Sanders said. He added, “Trump goes around and says: ‘Hey, I’m worth billions! I’m a successful businessman! And I don’t pay any taxes. But you — you make 15 bucks an hour — you pay the taxes, not me.’”

While Giuliani and Christie were aggressive in their defense of Trump, some of his other supporters were at a loss for how best to help him, saying the Trump campaign had offered no guidance. “We do get pretty regular emails and briefings on things when they are happening, but we have not, at least I have not, on the tax issue,” said Kevin Cramer (R-N.D.).

Kevin Madden, a GOP strategist who helped guide 2012 nominee Mitt Romney through his own political problems related to tax returns, said of Trump: “The looming threat of the tax returns issue has always been that Trump’s refusal to disclose makes it look like he has something to hide and that, ultimately, any disclosure could blow a hole in his appeal to the average taxpayer. Well, the threat has now become a reality.”

Sean Sullivan and Robert Costa contributed to this report.

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