Trump Tax Avoidance: Shrewd Smart Businessman or Deserves Jail Time?

[JollyGood]

Tax avoidance is covered within loopholes that exist within law but when it comes to Trump this is taking it a bit too far by any stretch of the imagination: https://boingboing.net/2019/05/07/ten-years-of-trump-tax-info-ob.html

Donald Trump paid zero income taxes in 8 of the 10 years examined by the Times between 1985 to 1994. "His losses were so big that in 1991 they accounted for fully 1% of all business losses declared that year by individual American taxpayers," wrote Susanne Craig.

Here are some excerpts from the link:

- The numbers show that in 1985, Mr. Trump reported losses of $46.1 million from his core businesses — largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totaling $1.17 billion in losses for the decade

- His core business losses in 1990 and 1991 — more than $250 million each year — were more than double those of the nearest taxpayers in the I.R.S. information for those years.

Lots more going on, the full article can be read here: https://www.nytimes.com/interactive/2019/05/07/us/politics/donald-trump-taxes.html

So where does the line become crossed between showing loses on core businesses and actually taking the mickey out of legal tax loopholes? Here is the key question:

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Does a businessman taking advantage of tax loopholes deserve to be US President?

or

Does a businessman taking advantage of tax loopholes deserve to be US President because is clever to legally exploit the system?

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[BADecker]

All USA Federal income tax (IRS income tax) is based on voluntary agreement with the IRS. When a person fills out an IRS form like IRS Form W-4, he states (though not directly and formally) that he is accepting the IRS as his taxing authority. This is where the IRS gets their authority from... the people who fill out the IRS forms. In Trump's case, he probably signed many IRS forms that indicate that he is accepting the IRS as his taxing authority.

In the case of the average working class person, if the person does NOT sign any forms that say/suggest that the IRS is his taxing authority, he doesn't owe taxes. If he fills out the IRS Form W-4 for/with his employer,
and on every line places "n-a,"
and writes across the form "EXEMPT,"
and signs it "non-assumpsit (no contract), his signature,"
his employer is required to NOT withhold,
and the IRS is required to not tax him.

The problem is that because most people have volunteered to pay, employers may not listen to the form, and IRS people will often make trouble for people. They simply don't know the law, just like the rest of the people.

That is the start of a letter-writing campaign by the employee, instructing the employer and the IRS to not withhold or tax. Depending on the ferocity of the attack against the employee, the letters might go on for 2 or 3 months, but they could go on for a lot shorter of a time period. Following that, the employee will need to take his employer and/or the IRS agent(s) in question to court seeking damages.

I am not going to go into detail regarding what to write in the letters, or how to take them to court, in this post. You can find the information, if you are serious, here - https://www.youtube.com/c/CraigLynch/videos.

In the case of Trump, if he is guilty of not paying the appropriate amount of income taxes, it is because he said that he was liable to IRS law, and then didn't file the right forms in the correct way. It is up to his attorneys to battle it out with the IRS. Because the IRS Code, and the Code of Federal Regulations for the IRS Code, are so convoluted (they include dips into Title 27 which is the Bureau of Alcohol, Tobacco, Firearms and Explosives Code, and the regs for Title 27), it could take a lifetime to determine who is right. The IRS might simply drop the case because it would be too expensive for them to fight it.

In our eyes, it might look like Trump didn't pay the taxes he legally owed. Our judgment might be right, or it might be wrong. It might not seem fair to us - because we have unwittingly been duped into voluntarily accepting the IRS as our taxing authority - but if the IRS won't fight Trump, and if Trump is getting away with not having to fight, there isn't really anything that he is doing illegally.

[jrrsparkles]

Every business man is doing the same, so there is nothing to be blamed when a successful business man became the president.I see this as a real skill and can bring revenue to the government, see what happened with tiktok they bullied and bought the company.

[squatz1]

I mean -- you did note the part that he had losses that were so large up to that point that it was being carried forward to offset income in further years. So is that really something we have to sit here and debate about? He lost money at some point and the tax code said that he could carry that loss forward to offset income.

Nothing wrong with that. Even if the 'loophole' was closed in later years (this is what I had read at somepoint, not sure on the source) Nothing was actually illegal here, right?

[Spendulus]

Tax avoidance is covered within loopholes ...
Does a businessman taking advantage of tax loopholes deserve to be US President?

or

Does a businessman taking advantage of tax loopholes deserve to be US President because is clever to legally exploit the system?

Huh? What are you talking about?

A businessman hires a tax accountant. He reads the tax code and applies it to the circumstances of the business, and files papers and pays tax accordingly.

That was done here. Where's your beef?

[Febo]

- The numbers show that in 1985, Mr. Trump reported losses of $46.1 million from his core businesses — largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totaling $1.17 billion in losses for the decade


Does a businessman taking advantage of tax loopholes deserve to be US President?
or
Does a businessman taking advantage of tax loopholes deserve to be US President because is clever to legally exploit the system?

Better question than this two would be: Does a businessman making $1.17 billion in loss deserve to run biggest economy? What loss he will make to that economy?

[Spendulus]

I mean -- you did note the part that he had losses that were so large up to that point that it was being carried forward to offset income in further years. So is that really something we have to sit here and debate about? He lost money at some point and the tax code said that he could carry that loss forward to offset income.

Nothing wrong with that. Even if the 'loophole' was closed in later years (this is what I had read at somepoint, not sure on the source) Nothing was actually illegal here, right?

Even to claim that a carry-forward of losses is a "loophole" is ridiculous. So everyone that's in a business now with Covid, they are almost all showing losses for 2020.

And it's a "moral question" as to their using a "loophole" and carry forwarding those losses?

Really?

[Cnut237]

Avoidance is morally dubious but legal.
Evasion is morally dubious and illegal.

They're both wrong, really. It's just that one of the wrongs is permitted. I'd say we need to examine the idea that performing immoral but legal actions should be lauded. This idea is a part of what puts people like Trump in power. Morality is of course subjective, but I am using it in the sense of obeying the letter of the law but not the spirit of the law.

[JollyGood]

Thank you for the detailed post. I wanted to respond to the point you made because it is true: effectively if Trump has done nothing illegal then he has done nothing wrong as far as the law is concerned and that is a huge thing to keep in mind.

~snip~

In our eyes, it might look like Trump didn't pay the taxes he legally owed. Our judgment might be right, or it might be wrong. It might not seem fair to us - because we have unwittingly been duped into voluntarily accepting the IRS as our taxing authority - but if the IRS won't fight Trump, and if Trump is getting away with not having to fight, there isn't really anything that he is doing illegally.

[franky1]

the business trick to spread the losses. is loans
by spreading a debt over 10 years. means each year you get to be in the minus for 10 years

but normal people dont get the same 'tax deductables' that businesses get. so while working in an office job or retail job (normal working class wages) you cant deduct the same things a business owner can for their lifestyle needs

working class peopel cannot spread loans as a 'income deductable' every year. which is another reason working class dont take out the same large loans as business owners do

yep
if your a business owner you pay tax on whats left after costs are handled
if you a working class person you pay tax on the income before costs are handled. meaning you then have to cover the costs with whats left after tax

many people try to create their own loopholes by creating dummy businesses or trusts. to pay the business/trust the income. handle all their costs and then and only then declare any profit/loss

but its not easy to do this and get away with it if your working class because employers are forced to try paying wages into the employees personal account and not other accounts in other names

..
another great tax deductable rich people use. is 'charitable foundations' yep the bill and malinda gates foundation. the clinton foundation. the trump foundation is so they can put their personal income into the foundation. pay no tax and then live off of the spending from the foundation

i know spendulus doesnt want to hear bad news being talked about trump. but when you see what he done with the funds in the trump foundation. he might rethink how loyalty/devotion to trump

[Spendulus]

Thank you for the detailed post. I wanted to respond to the point you made because it is true: effectively if Trump has done nothing illegal then he has done nothing wrong as far as the law is concerned and that is a huge thing to keep in mind.

What's hugely problematic is the implicit assumption here that the IRS is NOT DOING IT'S JOB, somehow, for the rich and the powerful.

The IRS certainly did it's job for Obama, when it allowed itself to be a weapon against Obama's political opponents and did his bidding on who to go after.

I don't believe that the IRS gives a pass to the rich and powerful, but it's an interesting question. Who made the IRS regulations that allowed Trump to pay next to nothing?

Congress...

What did Judge Learned Hand have to say about this issue?

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Quote by: Judge Learned Hand (1872-1961), Judge, U. S. Court of Appeals
Source: in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

http://quotes.liberty-tree.ca/quote/learned_hand_quote_6bf7

[squatz1]

Thank you for the detailed post. I wanted to respond to the point you made because it is true: effectively if Trump has done nothing illegal then he has done nothing wrong as far as the law is concerned and that is a huge thing to keep in mind.

What's hugely problematic is the implicit assumption here that the IRS is NOT DOING IT'S JOB, somehow, for the rich and the powerful.

The IRS certainly did it's job for Obama, when it allowed itself to be a weapon against Obama's political opponents and did his bidding on who to go after.

I don't believe that the IRS gives a pass to the rich and powerful, but it's an interesting question. Who made the IRS regulations that allowed Trump to pay next to nothing?

Congress...

What did Judge Learned Hand have to say about this issue?

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Quote by: Judge Learned Hand (1872-1961), Judge, U. S. Court of Appeals
Source: in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

http://quotes.liberty-tree.ca/quote/learned_hand_quote_6bf7

I personally do think that the IRS gives a pass to the rich, but not because of the Obamas, the Clintons, or whatever. I think that it is being done (and investigative journalists have shown this as well) because auditing rich people is much more expensive for the IRS to undertake. It takes a good amount of money to go after someone with money -- as they're going to have tax attorneys, CPA's, and so on ready to battle with you to save their client as much as possible. Poor people don't have the luxury.

Here's the ProPublica article - https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor

Makes sense given the fact that IRS budget is going to get gutted for people that are rich. I don't like the IRS as much as the next guy, but this whole thing does make sense.

[Spendulus]

....

I personally do think that the IRS gives a pass to the rich, but not because of the Obamas, the Clintons, or whatever.....

Disagree strongly. You've got to focus on the actual tax code. They only apply that code. If the IRS applies that code, the IRS has done their job. The tax return can be reviewed, and if there is no tax due, there are deductions that reduced the taxable sum to zero or below. Simple as that. The deductions are either acceptable or not.

The certain case of unacceptable and unfair application of the tax code by the IRS is when Obama used it as a weapon to shut down people who opposed him.

[squatz1]

....

I personally do think that the IRS gives a pass to the rich, but not because of the Obamas, the Clintons, or whatever.....

Disagree strongly. You've got to focus on the actual tax code. They only apply that code. If the IRS applies that code, the IRS has done their job. The tax return can be reviewed, and if there is no tax due, there are deductions that reduced the taxable sum to zero or below. Simple as that. The deductions are either acceptable or not.

The certain case of unacceptable and unfair application of the tax code by the IRS is when Obama used it as a weapon to shut down people who opposed him.

Well yes, you either use the tax code right or you don't. But would you agree that it is cheaper to audit poor people, right?

Take this quote from the ProPublica article:

For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do. “Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels,” the report said.

If you can't audit rich people due to budgetary constraints, isn't there an issue in funding for the IRS? I understand the whole 'efficient use of resources' but they literally don't have the resources to audit the rich, and that's just a fact FROM THE IRS.

[Spendulus]

....

I personally do think that the IRS gives a pass to the rich, but not because of the Obamas, the Clintons, or whatever.....

Disagree strongly. You've got to focus on the actual tax code. They only apply that code. If the IRS applies that code, the IRS has done their job. The tax return can be reviewed, and if there is no tax due, there are deductions that reduced the taxable sum to zero or below. Simple as that. The deductions are either acceptable or not.

The certain case of unacceptable and unfair application of the tax code by the IRS is when Obama used it as a weapon to shut down people who opposed him.

Well yes, you either use the tax code right or you don't. But would you agree that it is cheaper to audit poor people, right?...

No. Say the IRS wanted 100M in revenue. They could do us for 10k each or one fat cat. They'd have to do 10,000 of us to get it AND THAT'S IF EVERYONE PAID. Some wouldn't, some would make a deal for less, many simply didn't owe the money. So let's say they audit 10 people to get 10,000$.

Then they have to audit 100k people to get the 100M.

Versus one fat cat? Realistically, say they audit 10 fat cats, and tell each they'll settle for 10M. Sounds easier to me that a hundred thousand.

[JollyGood]

Where there is a problem is that the President of the USA owes over $400 million in loans to creditors that he has not named and he is due to pay back that loan after 4 years - which coincides with the end of his potential second term.

Whether Trump bullied TikTok or any other company the possibility he could be manipulated by those that he owes money to is a real national security threat.

Every business man is doing the same, so there is nothing to be blamed when a successful business man became the president.I see this as a real skill and can bring revenue to the government, see what happened with tiktok they bullied and bought the company.

[okala]

Trump is a very smart business man and that is why he was able to get a lot of wealth without government of the past find fraud in his business activities. He no how to go around taxation to his advantage.

[coins4commies]

This is how they would've liked it to go down

CPA: Sir, I've finished your taxes and you owe nothing this year

Trump: Thats too little.  Please go back and redo it

CPA: OK, I've redone it with you owing $750

Trump: Well can you eliminate some of my deductions so I can pay more?

CPA: How much more are we talking?

Trump: Call the NYT and ask what is acceptable for a presidential candidate. 

[Spendulus]

Where there is a problem is that the President of the USA owes over $400 million in loans to creditors that he has not named and he is due to pay back that loan after 4 years - which coincides with the end of his potential second term.

Whether Trump bullied TikTok or any other company the possibility he could be manipulated by those that he owes money to is a real national security threat.
...

Which would have been evaluated when he got his security clearance. But I'm dubious that info needs to go to YOU, or that "the public" is competent to evaluate such things.

Anyway, "due to pay back" is false. Those type loans are written for 7 year periods because of some federal banking regulation. The correct phrase is "due to be renewed."

[JollyGood]

Regardless of the technicalities of "repay or restructure" what cannot be denied is that Trump will have to make arrangements with people/organisations that he personally owes $400 million to about repaying or restructuring his phenomenal debt to his creditors.

To make matter worse, Trump has not named them. As for evaluating his finances and background checks for his security clearance when standing for office, it means nothing if he hid things ro was economical with the truth - and we do not know what he claimed when seeking clearance from the security services but I am sure that information will be leaked at some point too.

A competent Democratic Presidential candidate and running mate would have put this matter way beyond Trump and ensured he was a one term President but Biden and Harris look like they will be defeated heavily at the November 2020 ballots making Trump a two term President.

Which would have been evaluated when he got his security clearance. But I'm dubious that info needs to go to YOU, or that "the public" is competent to evaluate such things.

Anyway, "due to pay back" is false. Those type loans are written for 7 year periods because of some federal banking regulation. The correct phrase is "due to be renewed."