(Michael Nagle/Bloomberg News)

It turns out that Donald Trump, he of the non-released tax filings, claimed a 1995 income loss so large — $916 million — that the tax software back then couldn’t handle it; it didn’t have enough space for all the numbers. His lawyer had to separately type in -91 on front of 5,729,293 to report the loss.

Source: New York Times

Source: New York Times

Such losses can be claimed against taxes owed for three prior years and 15 future years, leading the New York Times, which broke the story, to conclude that “it could have allowed him to legally avoid paying any federal income taxes for up to 18 years.”

To the extent that the story made a splash, it’s certainly not because it disabused anyone of the notion that Trump has been sending big checks to the IRS. The conventional wisdom, as purveyed by Hillary Clinton in their first debate, is that he pays little to no taxes, which is why he won’t release the returns to the public. The leaked returns just confirm our priors.

Trump even went as far as to claim, in response to Clinton’s allegations, that not paying taxes just means he’s “smart.”

So, is this a big deal or not?

Politically, I’d guess not. Perhaps some undecideds might be turned off by the exposure of an alleged billionaire allegedly paying no taxes, while they pony up year in and out. Also, these losses were generated by a number of very big-ticket business failures by Trump in the (economically booming) mid-1990s, which one might guess would undermine his claim that he’s such a great businessman. But if you’re still undecided at this point, I have no idea what makes you tick, and thus no idea how this plays out.

Here’s what’s important about this, though, again, I’m not at all claiming this as breaking news: When people like Sens. Bernie Sanders and Elizabeth Warren say “the system is rigged,” this is what they mean. There’s nothing illegal in this story. Industries — real estate, in particular — have successfully lobbied the politicians whose careers they bankroll to give them precisely these kinds of tax breaks. This is just another case of the toxic and unjust interaction of wealth concentration and money in politics.

To get to the root of this, we’ve got a look a bit at Trump’s play here. Since profits equal revenue minus costs, “net operating losses,” or NOLs, occur when a business generates costs that exceed its revenue. The idea that firms can claim such losses against past or future liabilities is not, obviously, a bad idea. Consider a startup that loses money for its first couple of years, finally squeezing out a profit in year three. Or a firm that gets whacked in a recession. As economist Michael Mazerov put it, “Allowing businesses to average profitable years and loss years recognizes both that start-up businesses often incur losses for several years before they become profitable and that many businesses experience temporary losses in the course of an economic downturn.”

But as is often the case in tax law, what sounds reasonable is ripe for abuse. Real estate losses are notoriously easy to book. Trump bought buildings with borrowed money, which he could then deduct. Then, as tax lawyer Robert Kovacev put it, “Due to special carve outs in the tax code he could take depreciation deductions for real estate even while the real estate is appreciating in value.” It’s a very simple play: Once you combine debt-financing with booked (as opposed to real) depreciation, you’ve generated big losses against past and future tax liabilities.

The NOL rules could be changed to prevent such tax avoidance. The idea that you can claim losses for almost two decades is ludicrous, as is the case that wealthy (non-)taxpayers can simultaneously accrue large income gains while writing off liabilities with alleged losses. A rule that disallows losses in such cases seems commonsensical, even to the tax lawyer who set these deals up for Trump: “He felt keenly aware that Mr. Trump was living a life of unimaginable luxury thanks in part to [his] ability to relieve him of the burden of paying taxes like everyone else. ‘Here the guy was building incredible net worth and not paying tax on it,’ he said.”

I get that over the course of this benighted campaign, Trump has normalized many aberrant behaviors, but that said, I do find myself asking “Where’s the outrage?” on a lot of this stuff. Why has his “That makes me smart” response to Clinton gotten so little attention? If billionaires, or whatever he is, don’t pay what they owe in taxes, there are only three unfortunate consequences: Those of us with less means make up the difference, we lack the revenue to meet the challenges we face, or we borrow and run up the deficit.

Last night, as this news was breaking, I happened to be watching the Disney movie “Zootopia” on Netflix. In order to get Nick, the sly fox, to help her crack the case, Judy Hopps, the bunny-cop, points out that he has paid no taxes on his ill-gotten gains. The usually unflappable fox is clearly shaken up by the accusation and becomes her valued partner. In today’s America, that’s how it goes down in Disney cartoons. In the real world, not so much.