The latest revelations about Donald Trump's taxes are pushing questions about his business record, personal finances, and transparency back into the campaign spotlight. But they also connect to a larger policy fight: Trump is calling for a significant decrease in taxes on the wealthy while Hillary Clinton is calling for a significant increase.
That distinction is likely to come into sharper relief after a New York Times report that Trump, by claiming $916 million in business losses in 1995, may have been able to avoid paying federal income tax for up to eighteen years.
Trump and his campaign argued that it's proof of his financial and policy acumen. "I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them," Trump tweeted on Sunday.
Top surrogates drove that message home on television as well: Former Mayor Rudy Giuliani said the Times story proved Trump was a "genius" in an appearance on NBC's "Meet The Press" while New Jersey Governor Chris Christie told Fox News that it showed "what an absolute mess the federal tax code is" and how Trump would overhaul it.
So what's in Trump's tax plan? And would it clean up the "absolute mess" that Christie described?
Trump's plan has changed over time. He released a sweeping proposal last year, then scrapped it in favor of a somewhat smaller replacement last month which lowers tax rates on both individuals and businesses.
First off, experts say the plan would not affect the practice identified in the Times story that has generated the most attention — Trump's ability to claim a massive business loss and use it to reduce his personal tax bill for an extended period.
"Nothing about the plan would change the basic idea that if you take a loss you can carry it forward and count it against future income," Alan Cole, an economist at the Tax Foundation who has reviewed Trump's plan, said in an e-mail.
Reducing taxable income through business losses is especially common in industries like real estate, where landlords are allowed to offset the depreciated value of their commercial property against income earned elsewhere. That too would remain largely the same.
"The way the tax laws are structured, there are advantages to being in certain industries such as real estate or oil and gas," John Lieberman, an accountant and member of the New York State Society of CPAs, said. "It does not appear that would change under the Republican plan, except for certain types of business tax credits."
To the degree anyone is offended by Trump's tax arrangement, it's a case where "the real scandal is what's legal," as columnist Michael Kinsley once put it.
This wouldn't be the first time deductions available to the rich came under scrutiny. Joe Thorndike, author of "Their Fair Share: Taxing the Rich in the Age of FDR," recalled that the nation's top investors were hauled before Congress in the 1930s to explain how they used losses in the stock market crash to eliminate their tax bills for years. It was an entirely legitimate practice at the time, but Congress changed the rules in response to a public outcry.
"In the same ways people are talking about Trump right now, JP Morgan was the one who took it on the chin," Thorndike said in an interview. "People said it was insane that super rich people paid nothing while the country starved to death."
Other tax systems might change that. A tax plan based on consumption rather than income, for example, would have ensured Trump paid something in the years covered by the Times report. Critics argue it would likely end up more regressive than the current system, however, since poorer Americans spend a much greater share of their income and save less than the rich.
Another option would be to tax gross income, instead of net income. Some states do this already. Trump paid taxes on his income in New Jersey in the documents released by the New York Times because the state doesn't allow filers to deduct losses.
Or you could spread the wealth by applying the kind of deductions Trump used to benefit ordinary Americans. Lily Batchelder, a former economic adviser to President Obama, noted that individuals aren't allowed to deduct losses on their home values, only on investment property. They also aren't allowed to average their income across several years, which Trump was able to effectively do with his business losses, to obtain tax benefits for lower-income and middle-income households.
While it wouldn't ban Trump's '90s-era tax practices, his proposed plan would bestow a variety of new benefits to wealthy individuals and companies.
"Trump's tax plan would definitely be a huge tax cut for him," Batchelder said.
It would lower the corporate tax rate to 15% from 35% and give new options for deducting business investments at a total cost of about $2 trillion over ten years, per the Tax Foundation's analysis. It would slash individual income taxes by somewhere between $2.1 and $3.7 trillion, reducing the top rate from 39.6% to 33% while capping some deductions for high earners. And it would eliminate the estate tax, which only affects the top 0.2% of the country, at a cost of about $240 billion while limiting some provisions that benefit heirs to the ultra-rich.
On the individual front, the gains would be heavily concentrated at the top. For the bottom 80% of earners, after-tax incomes would rise by under 2%. The richest 1% of Americans, by contrast, would see an average bump between 10% and 16%.
It's not clear just how big the benefits would be because the campaign has declined to clarify whether it would create a new $1.5 trillion loophole that would allow richer Americans to count their personal income as business income and tax it at the lower 15% rate.
Still, almost none of these features would actually help Trump if he's paying zero already. If you claim no income to tax, the top rates on individuals or businesses don't matter. If Trump recovered his losses from the '90s and began turning profits again, however, he would gain from his tax plan proposal. And his heirs would eventually benefit from the elimination of the estate tax either way.
As for Clinton, there's nothing that leaps out in her plan so far that would force Trump to pay taxes while claiming major losses. But her campaign has proposed a variety of measures that would raise taxes on wealthy individuals who are turning a profit, including a new "Buffett Rule" that would create a minimum 30% tax rate for people with an adjusted gross income over $1 million.
The nonpartisan Tax Policy Center estimated the proposals would add up to $1.1 trillion in revenue over the next decade. Since then, Clinton has also proposed a new 65% top estate tax rate that would apply only to inheritances over $500 million.
Both candidates made the case for their approach in Monday's debate.
"I'm going to cut taxes big league, and you're going to raise taxes big league, end of story," Trump said, adding that Clinton's increase would "drive business out."
Clinton, by contrast, argued her plan would create a fairer system and boost the economy by distributing more gains to middle and lower income Americans.
"What I have proposed would be paid for by raising taxes on the wealthy, because they have made all the gains in the economy," she said.
That exchange was largely overshadowed by Trump's claim he was "smart" for trying to avoid taxes. But even as Trump's personal situation dominates the headlines, don't be surprised if the broader philosophical divide comes up more as well.