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Rudy Giuliani says Trump 'did nothing wrong' by avoiding paying taxes

Trump reportedly lost $916 million in 1995, allowing him to avoid federal income taxes for 18 years

Washington CNN  — 

Rudy Giuliani called Donald Trump a “genius” Sunday, in the wake of a New York Times report indicating he may have legally avoiding paying taxes for nearly two decades.

“The reality is, this is part of our tax code. The man’s a genius. He knows how to operate the tax code to the benefit of the people he’s serving,” the former New York City mayor told CNN’s Jake Tapper on “State of the Union.”

Throughout the contentious interview, Tapper repeatedly pressed Giuliani on his claims that Trump was a “genius” and a good businessman based on The New York Times reporting.

“I think that there are a lot of very, very successful businessmen and women who pay federal income taxes and don’t look for every single opportunity there is to avoid paying them,” Tapper said at one point.

The New York Times reported Saturday that Trump reported a loss of $916 million on his 1995 tax records – which, tax experts said, would have allowed Trump to avoid paying income taxes for a period of 18 years.

The paper did not look at his federal return. It obtained one page of his New York State resident income tax return as well as the first page of New Jersey and Connecticut nonresident returns.

CNN has not independently verified the documents’ authenticity, but Trump’s campaign has not challenged any of the facts reported by the Times.

Trump, the Republican presidential nominee, has not released his tax returns as is tradition among presidential candidates, claiming they’re under IRS audit. There are no legal restrictions against releasing tax returns that are under audit.

“It shows what a genius he is. It shows he was able to preserve his enterprise and that he was able to build it,” Giuliani said.

He insisted Trump isn’t to blame for failing to pay federal income taxes.

“No. The law is responsible for it,” Giuliani said. “If you have a set of laws, you live by those laws. And the reality is, you are ignoring completely the fiduciary obligation he has to all the people around him to run his business at the lowest possible expense.”

Senate Democratic Leader Harry Reid, who has kept up a drumbeat of Trump attacks over his taxes, said Sunday, “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.”

“Despite losing a billion dollars, Trump wants to reward himself with more tax breaks on inherited wealth while stiffing middle-class families who earn their paychecks with hard work,” Reid said.

Is Trump a good businessman?

Trump has placed his business record at the forefront of his list of qualifications for the presidency.

Tapper pressed Giuliani on whether someone who lost $916 billion in one year could reasonably argue he’s a good businessman.

“That doesn’t sound brilliant,” Tapper said.

“Well, yes it does, because he came back,” Giuliani said. “Because he came back, and he came all the way back. And isn’t that the history of America? I mean, people like Steve Jobs were fired by Apple and came all the way back. Churchill was thrown out of office twice and came all the way back.”

Another top Trump ally, New Jersey Gov. Chris Christie also called The New York Times’ report positive for Trump because, he said, it shows his resiliency.

“This is a guy who, when lots of businesses went out of business in the early 1990s, he fought and clawed back to build another fortune, to create tens of thousands of more jobs, and this is actually a very, very good story for Donald Trump,” Christie said on “Fox News Sunday.”

Giuliani said Trump’s personal financial disclosure form filed last year shows Trump made $680 million – enough that Trump wouldn’t have been able to carry over his 1995 losses through 18 years.

“He hasn’t released his tax returns. The only reason we know anything about this is because somebody released this to The New York Times,” Tapper said.

Giuliani again pointed to Trump’s financial disclosure, “which describes considerably more about his finances than the tax return.”

Tapper said: “He’s the first major party nominee since 1976 to not release his tax returns. If you’re proud of that, that’s great, but I don’t think you should be.”

And Giuliani responded that the scrutiny and attention being paid to The New York Times report “is a very clear indication of why someone might not want to release their tax returns.”

“You take something that is perfectly legal, something he had no choice but to utilize … and you try to make it into – he did no wrongdoing. … He did nothing wrong. The headline should have been, ‘Donald Trump takes advantage of legal provisions in tax code,’” Giuliani said.

Christie said Trump’s 1995 tax returns show “what an absolute mess the federal tax code is.”

“There’s no one who’s shown more genius in their way to maneuver around the tax code and to rightfully use the laws to do that, and he’s already promised in his tax plan to change many of these special interest loopholes and get rid of them,” Christie told Fox News.

‘Rather common’

Giuliani, who did not dispute the authenticity of Trump’s 1995 tax records and did not say how much Trump has paid in income taxes, said that “this is rather common in large, gigantic American businesses.”

“There aren’t very many smart businessmen that don’t take advantage of the legal tax laws that are there, and if they are, then they’re not very good businessmen,” Giuliani said.

And, he said, “in fact, 44%, 45% of America doesn’t pay any income tax.”

“Anybody that goes and has an accountant, H&R Block or just goes online, figures out all the deductions that are available to them. I mean, the reality is that most Americans take advantage of every deduction available to them,” Giuliani said.

Tapper said: “Most Americans pay federal income taxes though, though, sir, and Donald Trump apparently does not.”

“And very large businesses very often take advantage of these kinds of losses,” Giuliani said.

Tapper then asked Giuliani whether he personally pays income taxes. Giuliani said: “Well, that’s between me and my accountant and the IRS. And the reality is, I pay my lawful tax and he pays his lawful tax.”

Could Trump be sued?

Giuliani argued that Trump could have faced legal trouble for paying more than necessary in taxes.

“If he didn’t take advantage of those tax deductions of tax advantages that he had, he could be sued, because his obligation as a businessman is to make money for his enterprise and to save money for his enterprise. It would have been insane for him not to take advantage of it,” he said.

Tapper asked: “Sued by who? Who would sue him for paying personal income taxes?”

“Investors in his business, people who loan money to his business, banks that loan money to his business,” Giuliani said.

“That’s why the simplistic analysis of an extraordinarily complex code is very unfair,” he said.

Tapper responded: “I think that there are a lot of very, very successful businessmen and women who pay federal income taxes and don’t look for every single opportunity there is to avoid paying them.”

“There are not very many smart businessmen who don’t take advantage of the legal tax laws that are there. 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 or accountants,” Giuliani said.