Daily Camera (Boulder)

Fix the tax code

- Business · Tax Credit · Finance · Taxes · U.S. News · US Politics · Society · Income Tax · Fraud · Personal Finance · Politics · White-collar Crime · Crime · New York City · Donald Trump · United States of America · Congressional Budget Office · Warren Buffett · Democratic Party (United States) · Republican Party (United States) · U.S. Internal Revenue Service · Harvard University · U.S. Treasury · Lawrence Summers · Jimmy Carter

The New York Times al­leges that Pres­i­dent Don­ald Trump paid $750 in fed­eral in­come taxes in 2016 and 2017. Whether or not this is true (the Times has not made pub­lic its ev­i­dence), a tax sys­tem that lets some peo­ple — the su­per rich and the su­per poor — pay no taxes while most Amer­i­cans pay a lot in taxes is cor­rupt and un­sus­tain­able.

By con­trast, in 2016, house­holds in the mid­dle 20 per­cent of the U.S. in­come dis­tri­bu­tion earned roughly $60,000 and paid $2,200 (both on av­er­age) in fed­eral in­come taxes, ac­cord­ing to the Con­gres­sional Bud­get Of­fice.

No one re­ally likes taxes or pay­ing taxes. But pay­ing one’s fair share is one of the du­ties we all owe our coun­try. As War­ren Buf­fett has said, if his ex­ec­u­tive as­sis­tant pays a higher rate of taxes than he does, some­thing is very wrong. The sys­tem is in­equitable and un­fair.

And there are specifics in the tax code that are in­ex­pli­ca­ble and in­com­pre­hen­si­ble, ex­cept as spe­cial fa­vors for those who can af­ford lob­by­ists. Why, for ex­am­ple, does the tax code, crafted by both Democrats and Repub­li­cans, al­low a busi­ness tax­payer to write off per­sonal ex­penses, such as hair­cuts and greens fees, as busi­ness de­duc­tions? Why do real es­tate de­vel­op­ers en­joy such generous tax ex­emp­tions? Why are there pro­vi­sions on cap­i­tal gains that al­low them to pay very lit­tle or no fed­eral in­come taxes?

Fur­ther, the In­ter­nal Rev­enue Ser­vice is in­creas­ingly un­able to do its job as a re­sult of lack of over­sight and sup­port from Congress. A re­port co-writ­ten by for­mer Har­vard Pres­i­dent and Trea­sury Sec­re­tary Larry Sum­mers for the Na­tional Bureau of Eco­nomic Re­search says that $7.5 tril­lion in taxes will go un­col­lected in the next 10 years be­cause the IRS sim­ply does not have the means to en­force the tax law.

Dur­ing the 2016 cam­paign, Trump re­peat­edly crit­i­cized tax avoid­ance by the su­per rich, say­ing that he be­lieved rich Amer­i­cans should pay more in taxes on ev­ery dol­lar of ad­di­tional in­come. He was right.

Trump also cam­paigned on a prom­ise to stop the wealthy from rip­ping off the mid­dle class. This prom­ise helped him get elected. He was right on that point, too.

But, four years later, Trump has tax strate­gies avail­able to him that are sim­ply not avail­able to the vast ma­jor­ity of his sup­port­ers. Wage-earn­ing Amer­i­cans have taxes gar­nished di­rectly from their pay­checks. Some­one in Trump’s po­si­tion, how­ever, can hire tax lawyers and ac­coun­tants to push the rules right up to the line of fraud.

In 1977, Pres­i­dent Jimmy Carter’s fed­eral tax bur­den for the pre­vi­ous year was zero, thanks to a tax credit earned from pur­chas­ing equip­ment for his farm. Carter vol­un­tar­ily paid the Trea­sury $6,000, equiv­a­lent to 15 per­cent of his in­come, com­pared to the 14 per­cent paid by the av­er­age tax­payer that year. Maybe that makes him a chump or maybe that makes him a pa­triot. But just as in 1977 and 2016, the tax code is still un­just and ir­ra­tional and needs to be fixed.

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