By now virtually everyone is aware that Donald Trump claimed a $916 million tax loss on his 1995 returns. We know this because The New York Times obtained a partial copy of Trump's state returns and published a story speculating that Trump has been using this loss to avoid paying any income taxes for years (18 years is the number being thrown about). The Trump campaign is going to have to do a lot of damage control to mitigate the political effect of the Times' revelations, but a real estate developer claiming huge losses isn't all that remarkable from a tax perspective.
The Times article implies, and a host of follow-up stories from other journalists and publications have practically stated, that the 1995 loss shown on Trump's New Jersey, Connecticut, and New York returns means that Trump probably hasn't been paying federal income taxes since at least 1995. The authors point out that Trump could have used $50 million of that tax loss each year for 18 years. They say that this would have canceled out Trump's income as CEO of a company involved in Atlantic City operations as well as his money from The Apprentice (which came to about $50,000 to $100,000 per episode). The authors also, like many others, gleefully point to Trump's under the breath remark at the September 26 presidential debate that he was very smart in response to Hillary Clinton's speculation that he hasn't been paying taxes.
None of that proves much of anything. We have no idea what Trump's income is, and without knowing that, we don't really know how quickly he might have exhausted the huge tax loss. For that matter, we don't know what other losses he might have claimed before or after 1995 which would have affected his tax liability. The Times has a piece of Trump's tax puzzle, and they've stretched it as far as they can to back up Clinton's debate contentions. Everyone wanted Trump's tax returns so they could prove he wasn't paying taxes (or that he's not as rich as he claims or that he doesn't give to charity or something -- anything -- else bad) and so a 20-year-old tax document is serving as a substitute for a full disclosure, feeding into narratives that were already pre-written. Of course, one could argue that Trump's failure to disclose his returns caused this kind of debate, but because the press has already tried and convicted Trump of "something" based on very little information, perhaps his aversion to disclosure isn't so hard to understand.
What no one, even the Times, has argued is that there is anything inappropriate in this partial disclosure. Just as Trump has long argued, it is perfectly legal to claim tax losses and then use them to cancel out future income, within the limits allowed by the tax code. Even Trump's flippant response about the world of real estate isn't that farfetched. And Trump's empire was collapsing around him in the 1990s, which many have said fits with the timing of the 1995 loss. There has been some fringe speculation about tax shelters and the magnitude of Trump's actual cash losses (as compared to his claimed tax loss), but there isn't anything resembling enough information to make an informed conclusion on any of that.
This information is going to hurt Trump. It couldn't have been timed better to damage his campaign. The Times' conclusions about Trump's lack of paying taxes dovetails perfectly with the billionaire's disastrous debate performance. Trump's campaign staff, if they want to, can easily explain how a real estate developer had valid losses in the 1990s and why it was fair for the candidate to take advantage of them. But they will have a much harder time managing the political fallout from the perception that a wealthy businessman has a zero effective tax rate -- just remember all the negative press Mitt Romney received for a tax rate in the teens.