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Affluent Christian Investor | May 20, 2019

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Trump, Taxes, and NYT’s Hypocrisy

Donald John Trump, Republican candidate for United States President (Photo by Gage Skidmore) (CC BY-SA) (Resized/Cropped)

Donald Trump, Republican candidate for United States President
(Photo by Gage Skidmore) (CC BY-SA) (Resized/Cropped)

The New York Times ran an article this past weekend implying that Donald Trump has paid no taxes for the past two decades, because of a large loss in 1995. The problem is that in 2014, the Times also paid no taxes, despite a profit.

http://www.forbes.com/sites/jeffreydorfman/2016/01/31/new-york-times-hypocrisy-on-corporate-taxes-reaches-record-high/#271774276577

… for tax year 2014, The New York Times paid no taxes and got an income tax refund of $3.5 million even though they had a pre-tax profit of $29.9 million in 2014. In other words, their post-tax profit was higher than their pre-tax profit. The explanation in their 2014 annual report is, ‘The effective tax rate for 2014 was favorably affected by approximately $21.1 million for the reversal of reserves for uncertain tax positions due to the lapse of applicable statutes of limitations.’ If you don’t think it took fancy accountants and tax lawyers to make that happen, read the statement again.

So it’s bad for Trump, a run-of-the-mill billionaire, to use sophisticated tax planning, but what about the Times herself, which broke this story? They’re owned by Carlos Slim, a far wealthier man, and this trick they pulled is more complicated than anything I’ve seen and I was a professional tax consultant for corporations and very high net worth individuals.

The problem is not that Donald Trump and other wealthy individuals with armies of accountants and tax lawyers can use large losses to offset gains in future years. The problem is that the rest of us can’t. Of course losses should be allowed to offset gains. It’s an INCOME TAX, not a Gross Revenues Tax. Losses are part of calculating income. The injustice is that without very complex and expensive tax planning, the rest of us are limited to bringing forward only 3,000 dollars in losses and that’s for a limited time.

Justice is not forbidding the wealthy full deductibility of actual losses; justice is allowing all of us to do it. Sunset the tax code. Flatten the rates. Treat us all like billionaires!

 

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