Would you voluntarily pay more tax than you have to?
I have read the New York Times article concerning Mr. Trump’s (illegally) leaked and published tax return from 1995, and I am left trying to figure out what all the hoopla is about. Even the Times article states that what Trump did was not illegal. In fact, over 500,000 other taxpayers have used exactly the same tax rule to write off their capital losses as did Mr. Trump. That is what the so-called “loophole” is there for. It was not written by Mr. Trump, but by Congress. Nor was it written at the behest of Mr. Trump so he could take advantage of the tax system; the law dates back to 1918. Mr. Trump may be old, but he is not that old.
What the Times seems to take issue with is the amount, which they peg at “nearly a billion dollars”. In actuality, the total was $916 million and while that is a large sum, it rounds back to “over 900 million”, not “almost a billion.” Still, the latter makes a bigger splash. Personally, I don’t see why they couldn’t have gone with the actual amount, as did the Washington Post. But it isn’t about accuracy, is it? It’s about selling newspapers and ensuring a Hillary Clinton victory at the polls in November.
It’s funny. Back in 1995 when this all happened, the New York Times covered it differently. Back then he was hailed by then Lt. Governor Betsy McCaughey as “the comeback kid.” This is particularly ironic, since the same moniker was applied to Bill Clinton, Hillary Clinton’s husband, when he was running for president the first time. Back then, Trump was a hero, a developer who “managed to erase much of his debt and is moving ahead with major projects at a time other developers are idling.” In fact, there was even mention of a Perot-Trump presidential ticket. Joked Charles A. Gargano, chairman of the Empire State Development Corporation, “He would be the most loved Vice President since Spiro T. Agnew.”
Perhaps for Vice – but certainly not for President. Not today anyway. Not in the opinion of the New York Times of 2016. Not when he is running as a Republican, and against Hillary Clinton, who had the presidency taken away from her once already by Barack Obama. It darned sure isn't going to happen again, particularly by someone the likes of Donald Trump!
No, in 2016, Mr. Trump is instead excoriated for taking the same tax write-off that half a million other Americans have taken, including Hillary Clinton herself. The NYT’s main heartburn seems to be that due to the write-off, Mr. Trump “could have avoided paying federal income taxes for 18 years;” that being the Times estimate of how long it might take for Mr. Trump’s earnings to equal the loss he claimed. Since the Times does not have Mr. Trumps other returns, this is pure speculation; speculation of the same sort that Ms. Clinton indulged herself in during the first debate.
But let’s say that it really did take 18 years for Mr. Trump’s earnings to offset his losses. So what? Even the Times admits he did nothing illegal. So where’s the beef? What’s wrong with using the tax code to minimize the amount of taxes you have to pay? Do you voluntarily pay more in taxes than you have to? Have you ever decided not to take an available deduction because you figure that it is somehow more “patriotic” to go ahead and pay the tax even if it’s not required?
Hillary Clinton used the same law to "avoid" paying her “fair share” in her 2015 tax return, reporting a net long term capital loss of $699,540, meaning she gets to offset earnings by the same amount before she pays taxes on them. I guess that is ok though, since $700,000 is much smaller than $916 million.
I wish I had that kind of “pocket change.”
But, as they wrote the story, I am guessing then that the New York Times itself, that mighty whistleblower standing on the side of the common person, would never stoop so low as to claim a write-off or tax deduction that would absolve them of paying their “fair share” of income taxes.
If I guessed that I would have guessed wrong. The NYT must not have a problem claiming legal tax breaks when it comes to their own taxes, because in tax year 2014, the New York Times not only paid no taxes, but received an income tax refund of $3.5 million even though they had a pre-tax profit of $29.9 million dollars. How did they do this? According to their 2014 annual report, “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.”
What does that mean? Guess you have to have a lot of fancy, highly-paid lawyers working for you to uncover all the useful tax “loopholes” to be able to take advantage of things like that. Evidently, that is ok for the New York Times to do, but strictly verboten for Donald Trump. Or so the NYT and others seem to think.
Incidentally, Mr. Trump mentions this incident in his book, “the Art of the Comeback,” published in 1997. If this were Hillary Clinton, the press would just say “old news – let’s move on.” But it isn’t Hillary, so suddenly, something that happened over 20 years ago is news.
Ms. Clinton asks the question, “What kind of genius loses a billion dollars in a single year?” Well, it is pretty easy to lose money in real-estate when the real-estate market crashes. Just ask millions of homeowners who had this very thing happen to them in the bursting of the housing bubble from 2007-2012. Or when the government changes the law on you, turning something that was profitable suddenly into something that is not – which is what happened here, and which is happening to coal miners and coal-fired power plants across the country.
And Ms. Clinton should know herself how easy it is to lose a billion dollars in a single year. During the past six years, mainly during her tenure, the State Department managed to misplace and lose around $6 billion due the improper filing of contracts, according to a newly released Inspector General report. This is not money lost due to a market downturn, but rather money actually lost, like you might lose your car keys, due to inefficiency and ineptitude in the organization she headed.
But that's different, right? What’s $6 billion of the taxpayer’s money when you are the federal government? Chump change. A quick google search reveals that the government loses billions every year. Most government agencies can’t even be audited properly because their records are in disarray or completely non-existent. No way should one think that Hillary was at fault, simply because she was in charge and it happened on her watch.
Hillary, the media, and others on the left claim that Trump pays no taxes, as if he is some kind of leach sucking the life’s blood out of the tax coffers and giving nothing back in return. But in fact Mr. Trump is responsible for quite a few dollars filling the tax coffers of the federal government and the state and local municipalities where he owns businesses. Income taxes, property taxes, sales taxes and no-doubt others; New York for example has a plethora of taxes.
Surely his employees pay their taxes, income, property, and sales. And since they are paid by Mr. Trump, ultimately, the money comes from Mr. Trump. Surely his businesses pay property taxes, and turn over sales taxes to the state as well. It would be interesting to see exactly how much the federal government and state and local municipalities have benefited from Trump’s businesses over the years – but in reality, the only thing that the Democrats are interested in is squeezing Mr. Trump personally; as if those businesses and that money would have been there anyway absent Trump.
So what was the purpose of this article anyway?
As The Washington Times put it, “This October surprise was apparently meant to suggest that the Donald was either an incompetent businessman and couldn’t be the rich man he says he is, to run up losses like that, or an unpatriotic genius, to use the tax code to enable him to save his business and stay alive to earn again.”
Certainly the executive editor of the New York Times thought it a matter of “public concern.” At a panel discussion at Harvard in September, he made the comment that he “would risk jail time in order to print Trump’s taxes, as it was a matter of ‘public concern.’” Certainly it was a matter of concern to him – and he may well get the opportunity to find out if jail time is in the offing. It is uncertain at this point whether or not Baquet will ultimately face incarceration; no charges have been filed so far. Should he or the paper be charged, however, there is sure to be a court case that ultimately will end up in the Supreme Court.
It may seem like a clear-cut case of First Amendment rights on the part of the paper; freedom of the press. However in this case, there are specific federal and state laws that prohibit publishing tax information without the consent of the individual. Federal law in 26 U.S.C. § 7213(a)(3) states that
It shall be unlawful for any person to whom any return or return information (as defined in section 6103(b)) is disclosed in a manner unauthorized by this title thereafter willfully to print or publish in any manner not provided by law any such return or return information. Any violation of this paragraph shall be a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution.Deciphering the legalese a bit, “return information” (referring to the tax return), includes not only the documents themselves, but also the “amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments or tax payments.”
Why? Because, oddly enough, this is personal information which cannot be divulged for any citizen of the United States; and Donald Trump is a citizen of the United States.
But that may not matter since it wasn’t his federal tax return that was disclosed. It was the first page of his 1995 New York state resident income tax return, the first page of his New Jersey and Connecticut nonresident tax returns.
In New York, it is unlawful “to divulge or make known in any manner the amount of income or any particulars set forth or disclosed in any report or return.” The penalty is fines up to $10,000 and imprisonment for up to one year. In New Jersey, it is a fourth degree crime, carrying a maximum sentence of 18 months in prison, while Connecticut’s law on the subject does not appear to apply in this instance.
However, if there is one thing we know about lawyers and the law, it’s that “it all depends on what the definition of is, is.” Something that may seem a plain as the nose on your face may mean something else altogether once a passel of lawyers get through with it. So who knows? It may turn out that it wasn’t illegal after all – or illegal enough to worry about, being that Trump is the target.
In the meantime, this has once again taken the focus off Hillary and put it on Trump albeit not this time for anything he has said. Wouldn’t it be nice if we could talk about substantive issues for a change, instead of things like fat beauty contestants, Trump’s latest tweet, or speculation on why exactly he is up a three o’clock in the morning when most “normal people” are in bed? But no – we have to discuss a single page from three separate state tax returns that are over 20 years old.
Presidential politics in America; always a three-ring circus, but this year even more so than normal.