Trump’s tax fixes mostly help­ful to Trump

Daily Freeman (Kingston, NY) - - OPINION - Ruth Mar­cus is syn­di­cated by the Wash­ing­ton Post Writ­ers Group. Ruth Mar­cus Colum­nist

WASH­ING­TON >> “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 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 was 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 was 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.

Repub­li­can New Jersey Gov. Chris Christie 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?

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.” Who 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 at Mon­day’s 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 on the Tax Pol­icy Cen­ter’s TaxVox blog.

And as to Trump’s claim that he un­der­stands the rigged tax sys­tem so 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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