“The only news here,” Donald Trump’s campaign declared in an unsigned statement emailed late Saturday night, “is that the more than 20-year-old alleged tax document was illegally obtained, a further demonstration that The New York Times, like establishment media in general, is an extension of the Clinton Campaign, the Democratic Party and their global special interests.”
No. The news — unrebutted by the Trump campaign as of this writing — is that Trump could have avoided paying federal income taxes for 18 years. Assuming that the claimed losses were legit, this would have been legal. The opportunity for tax avoidance, which could have shielded as much as $50 million a year in Trump income from any federal income tax liability whatsoever, is the result of rules that permitted him to carry forward net operating losses from his businesses 15 years into the future, and to use those losses to wipe out taxable income for three previous years as well.
It is one thing for us — that is, the rest of us tax-paying chumps — to know, thanks to disclosures required by casino regulators, that there were a few years in which Trump paid no taxes. It is one thing to suspect that there may have been additional no-tax years.
It is quite another to have documentation that strongly suggests Trump’s tax holiday could have gone on for so long. Perhaps Trump had so much income that he used up his operating loss deductions in less than the allotted time. Or perhaps his businesses generated additional losses that permitted him to pay no federal income taxes for even longer.
New Jersey Gov. Chris Christie (R) said on “Fox News Sunday” that the report showed Trump’s “genius” and was “actually a very, very good story for Donald Trump.” Uh-huh. If it’s such a good story, why hasn’t Trump been eager to let us see his possibly zero-liability tax returns? Really, why not run a commercial boasting of his tax genius, as he did (“That makes me smart”) during the debate last Monday night?
On Sunday morning, Trump tweeted that the story illustrates that “I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them.” Let’s look at Trump’s “fixes.” Whom would they help most? Donald J. Trump.
First, he would do away with the estate tax, shielding his purported billions from taxation (although the latest version of his plan would subject some assets to taxes on their appreciated value). Second, he would lower the top income tax rate — if he ever were to pay it — to 33 percent from the current 43-plus percent, including surcharges imposed by the Affordable Care Act, which Trump would also repeal. Third, Trump has suggested he would tax the income of businesses like his at rates as low as 15 percent. (Trump seemed to have dropped that provision from his latest plan, but he mentioned it during the debate.)
Consequently, the nonpartisan Tax Policy Center found, the greatest benefits of Trump’s tax plan would flow to the wealthiest taxpayers. “Trump 3.0 is probably somewhat less regressive than Trump 1.0, but it still is likely to provide outsized benefits to the highest income households,” Howard Gleckman wrote last month on the Tax Policy Center’s TaxVox blog.
And as to Trump’s claim that because he understands the rigged tax system he alone can fix it — none of Trump’s suggested fixes would affect his ability to avoid paying taxes. There are sound policy reasons to let businesses deduct operating losses, and to carry over those losses into other years; we want a tax system that does not discourage entrepreneurial risk-taking. But the real estate business, with its highly leveraged investments, huge interest deductions, opportunities for depreciation and tendency to realize most income as capital gains, can particularly benefit from — or manipulate, depending on your perspective — these provisions.
Trump in charge of the tax code would not be a case of Nixon goes to China. It would be a case of Trump, as always, doing what’s best for Trump.
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