Donald Trump’s tax scheme and the system that let him get away with it for so long.
The problem isn’t just Donald Trump deducting $70,000 in haircuts from his taxes or counting his family home in Westchester County as a business expense. It’s also the system that let him do it.
The New York Times’s blockbuster report on the president’s long-sought tax returns has sparked outrage in some corners about his tax bill and business practices. The Times discovered that Trump paid no federal income taxes at all for several years, and in 2016 and 2017, he paid just $750. It also revealed enormous losses Trump says he incurred on his businesses, many of which he used to later dramatically reduce what he owed to the government, an ongoing $100 million battle with the IRS, and more than $400 million in debt that’s about to come due.
Trump Tax Debacle
It is clear that President Trump is not doing so hot, business-wise, and has made some bad bets. The Times investigation also suggests the president has made some legally questionable maneuvers with regard to his taxes — turns out a guy who lies a lot about everything also lies about his finances, to the public and potentially to the government. But it’s worth stepping back and examining the framework that enabled Trump: one with a litany of tricks and loopholes that allow the wealthy to avoid paying their fair share in taxes, and one that fails to enforce the laws in place to catch bad actors.
“IF YOU ARE WEALTHY AND HAVE AT YOUR DISPOSAL ACCESS TO RESOURCES TO FIGURE OUT WAYS TO TOE THE LINE WITH RESPECT TO TAX LAWS OR TOTALLY EVADE EXISTING LIABILITIES, THERE’S AN INFRASTRUCTURE IN PLACE FOR YOU TO DO IT, AND IT’S INCREDIBLY HARD FOR THE IRS TO GO AFTER YOU”
“We essentially have a two-tiered system in this country,” said Natasha Sarin, an assistant law professor at the University of Pennsylvania. “If you are wealthy and have at your disposal access to resources to figure out ways to toe the line with respect to tax laws or totally evade existing liabilities, there’s an infrastructure in place for you to do it, and it’s incredibly hard for the IRS to go after you.”
Some of what Trump appears to have done is par for the course in terms of tax tactics enlisted by businesses and rich people. Some of it is not, for a businessman and, perhaps more importantly, for a president.
“In the history of businesspeople that are unscrupulous and really aggressive with tax matters, [Trump] is not literally unique; it is definitely on the tail of distribution that’s more aggressive, likelier to be disputed by the IRS,” said Kimberly Clausing, an economist at Reed College. “There are other businesspeople in that tail. What there aren’t are presidents who are clearly using their office for financial gain.”
On all fronts, it is troublesome — even if some or much of it is legal, it feels a lot like cheating in a game that it isn’t even possible for most people to play. The self-proclaimed ultra-rich president of the United States is paying less in taxes than millions of Americans.