Pres­i­den­tial can­di­date Trump is no tax wizard

One of the few in­ter­est­ing ar­gu­ments Don­ald Trump has made on the cam­paign trail has been his in­sis­tence that, be­cause he has a way of not paying his taxes, he’s a fi­nan­cial wizard am­ply po­si­tioned to re­form the na­tion’s tax sys­tem. He likes to as­sert tha

Daily Local News (West Chester, PA) - - FRONT PAGE -

One of the few in­ter­est­ing ar­gu­ments that Don­ald Trump has made is that he is a fi­nan­cial wizard.

So this week’s in­ves­tiga­tive re­port from The New York Times on a tricky tax tac­tic Trump em­ployed in the early 1990s to ab­solve him­self of tax­payer re­spon­si­bil­ity is worth con­sid­er­a­tion.

Turns out Trump avoided telling the IRS about hun­dreds of mil­lions of dol­lars in tax­able in­come us­ing an in­ven­tive strat­egy that’s so out there in the form of ac­cepted tax re­port­ing rules as to be rated a fail­ure — even at the time — by some of the coun­try’s smartest tax at­tor­neys.

Trump, faced with the in­abil­ity to re­pay hun­dreds of mil­lions of dol­lars to Trump casino bond-hold­ers, man­aged to per­suade or pres­sure those in­vestors into swal­low­ing huge losses. The money squan­dered was their money, and they had the right to write off the short­falls with the IRS. But be­cause for­given debt counts as tax­able in­come, Trump should have re­ported it as such. In­stead, his fi­nan­cial team came up with a novel ap­proach to avoid telling the IRS. As one ex­pert told The Times, Trump was get­ting some­thing for noth­ing, and that’s hardly fair to hard-work­ing busi­ness peo­ple who risk their liveli­hoods to make good, and hardly fair to work­ers who pay their taxes with the ex­pec­ta­tion of fair play across the board.

The loop­hole the blus­tery bil­lion­aire used, that tax at­tor­neys found legally du­bi­ous at the time, traded worth­less Trump part­ner­ship eq­uity for debt. In a 25-page let­ter from tax ex­perts on Trump’s avoid­ance scheme at the time, at­tor­neys warned the plan was full of red flags and ar­gued the strat­egy would likely fail be­fore the IRS.

Re­mem­ber that, un­like other se­ri­ous pres­i­den­tial can­di­dates, and can­di­dates lower down the food chain, Trump has not opened his tax records to pub­lic re­view. So it re­mains un­clear whether his strat­egy was chal­lenged by the feds or if it worked.

But tax ex­perts in­ter­viewed by Times re­porters say Trump’s use of the le­gal fic­tion placed him far out­side the scope of other real es­tate de­vel­op­ers also look­ing for tax pro­tec­tion. Mean­ing, Trump was no reg­u­lar busi­ness guy try­ing to do his best with a goofy tax code. What Trump was try­ing to do was much more risky and likely il­le­gal un­der rules at the time. And he talks with a straight face about a sys­tem rigged against him.

Ef­forts to close one of the tax loop­holes bore fruit in 1993. The big­ger loop­hole that Trump worked to ex­ploit was closed in 2004. And guess who voted with other sen­a­tors to close it? Sen. Hil­lary Clin­ton.

Many Trump sup­port­ers say they could never vote for Clin­ton be­cause of her e-mail and foun­da­tion con­tro­ver­sies. But Trump’s busi­ness prac­tices have con­sis­tently painted a por­trait of a man only in the game for him­self. Can any­one re­ally be­lieve he will turn that self­ish self-in­ter­est into le­git­i­mate pub­lic pol­icy re­form?

What would be in it for him?

Re­mem­ber that, un­like other se­ri­ous pres­i­den­tial can­di­dates, and can­di­dates lower down the food chain, Trump has not opened his tax records to pub­lic re­view.

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