President Trump attempted to defuse the controversy surrounding his tax returns during the second and final presidential debate by claiming that he prepaid his federal income taxes.
Democratic presidential candidate Joe Biden pressed Trump on his unreleased tax returns at the October 22 debate, which was more substantive and less disorderly than the first meeting between the two candidates.
As a part of his response, Trump said he recently asked his accountants how much he has paid in taxes.
“They said, ‘Sir, you prepaid tens of millions of dollars,’” Trump said. “I prepaid my tax — over the last number of years, tens of millions of dollars.”
The New York Times, which gained access to two decades of Trump’s tax returns but hasn’t released the documents, reported last month that the president in 2016 and 2017 paid only $750 in federal income taxes each year. If Trump had prepaid his taxes, the returns would show it, according to Omri Marian, a professor at the University of California, Irvine School of Law.
“Line 56 (for pre-2018 returns), where the $750 figure comes from, calculates the substantive income tax liability for the year BEFORE ANY INCOME TAX WITHHOLDING AND PREPAYMENTS are taken into account,” Marian tweeted. “So that was his total federal income tax liability for the year.”
During the debate, Trump said the $750 figure quoted by the Times was a “filing fee” and reiterated that his tax liability was “millions and millions of dollars.” But the IRS doesn’t charge any fees for filing income taxes unless a taxpayer files after the deadline.
“I just learned from the president that there’s a $750 tax filing fee,” Leonard E. Burman of the Urban Institute tweeted after Trump’s remarks. “Wow, who knew?”
The president said he would release his tax returns once the IRS completes its audit, which the agency began in 2011 after Trump claimed a $72.9 million refund for the 2009 tax year.
“I get treated very badly by the IRS, very unfairly, but we had a deal all done,” Trump said. “As soon as we’re completed with the deal, I want to release it.”
IRS Commissioner Charles Rettig said during a 2019 House Appropriations subcommittee hearing that there is no rule prohibiting taxpayers from releasing their own tax information while under audit.
O-Zones and Minorities
During a question about race in the United States, Trump highlighted the Opportunity Zones program as an example of how his presidency has benefited minority communities.
Created by the Tax Cuts and Jobs Act, the program allows for the deferral, reduction, and sometimes elimination of capital gains tax when those gains are invested in qualified opportunity funds or businesses.
“It’s one of the most successful programs,” Trump said. “People don’t talk about it. Tremendous investment is being made. The biggest beneficiary are the Black and Hispanic communities.”
Many news reports over the last few years — including by the Times and ProPublica — have questioned whether Opportunity Zones serve more as a tax break for wealthy investors than a program to uplift impoverished communities.
But if Trump wins a second term, a substantial expansion of the program is on his to-do list, according to White House adviser Ja’Ron Smith.
Smith said October 22 that the president wants to allow governors to designate another 25 percent of their states’ low-income census tracts as Opportunity Zones. The administration also seeks to work with Congress to give investors more time to invest and to increase reporting requirements to better track the program’s metrics, Smith said.