September 29, 2020

"The government allows income to be sheltered from taxation for hundreds of different reasons...."

"[T]he formidable complexity of the tax code makes it difficult to tell when wealthy taxpayers have crossed legal lines. For the rich, taxation often becomes a kind of structured negotiation between the taxpayer’s experts and the government’s experts... Mr. Trump claimed a tax refund of $72.9 million in 2010, according to the Times report; the government paid the claim, and then opened an investigation. If Mr. Trump loses, he could owe the government more than $100 million in repayment, interest and penalties. It should not take federal authorities more than a decade to determine whether Mr. Trump has paid the full amount he owes.... On Tuesday night, when Mr. Trump and his Democratic opponent, Joe Biden, take the stage for their first presidential debate, both men should be asked what steps they will take to ensure that all Americans pay the full amount they owe...."

So says the Editorial Board of the NYT in "The Picture of a Broken Tax System/Donald Trump’s tax returns illustrate the profound inequities of the tax code and the shambolic state of federal enforcement."

I read the whole thing, and here's what bothers me. First, they suggest that there are too many loopholes in the tax code that rich people take advantage of. The code is so complicated, that motivated tax payers will interpret what they can to their advantage, use it, and argue with the government about it.

It makes me think of my old law school tax professor who liked to say that a tax return is an offer, and you see if the government accepts it or makes a counteroffer. Trump made his offer in 2010, and the government accepted it, and sent him $72.9 million refund but also kept investigating. It's 10 years later, and they're still hovering over him, threatening to take it back — with interest and penalties.

The NYT editors say that the IRS needs more more funding so it can quickly and aggressively enforce the existing tax code. The headline speaks of "the profound inequities of the tax code," but the editors never get around to proposing eliminating loopholes and complexity. Why not? Is it because what they want is to get Trump, and changing the law prospectively is irrelevant to that goal? The only thing that relates to Trump is that the investigation is taking too long. If only the IRS could be more aggressive perhaps they could have figured out by now whether it agrees with Trump's interpretation of the over-complicated law or not.

129 comments:

Mikey NTH said...

A loophole is something completely legal that is done by someone I don't like. "Curse that foul villain! We would have him arrested and jailed for tax avoidance, but he followed the law!"

Dave Begley said...

Ann is so, so right.

I hope the Trump debate prep team reads the Althouse blog.

Limited blogger said...

We are Taxed Enough Already

Mike Sylwester said...

New York Times Co. paid no federal taxes

.... the New York Times Co. paid no federal taxes in 2017, despite earning $111 million that year. ...

When the tax law changed, the Times Co. had a tax asset, meaning it had a credit, likely because it had lost money in the past, that it could use to lower its future tax bills. But once the tax rate dropped, the Times Co. acknowledged that that tax benefit wasn't worth as much as it thought. It therefore had to lower the value of those assets for the 2017 tax year.

The drop in the value of those assets appears to have resulted in a nearly $69 million tax gain, wiping out (and then some) the nearly $42 million that the Times Co. reported as its tax expense in 2017. ...

Craig said...

This dumb Fake News story, more than any other, has convinced me that the Idiocracy is here in 2020.

It's fitting that Joe Biden will be in charge of it.

Connie said...

Watch the NYT and all of the other proclaimers of "unfairness" and "loopholes" squeal whenever a flat tax system is proposed and the truth of their motivations become clear.

Mcbean. Coco Mcbean. said...

If people actually cared about fairness in the tax code, they would implement a flat tax incurred when purchasing new goods. The primary problem with flat tax proposals is of course that governments gotta government, and what would actually happen is that the tax would be implemented ON TOP of all the other many many taxes we pay. See: VAT. Every single thing other tax should be eliminated in favor of a flat point of purchase tax. Saving should not be punished, and the richer you are and the more money you spend, the more tax you pay. It’s a pipe dream, of course. Too little opportunity for graft.

Fernandinande said...

"In an unusual move, FedEx's Smith claimed in a news release on Sunday that the New York Times Co. paid no federal taxes in 2017, despite earning $111 million that year. "Pertinent to this outrageous distortion of the truth is the fact that unlike FedEx, the New York Times paid zero federal income tax in 2017," Smith said."

0_0 said...

Trying to make sense of the NYT again?

Gilbert Pinfold said...

The NYT paid no corporate taxes.

Michael K said...

There is a reason why the rich have shifted from Republican to Democrat and here it is. The complexity of the tax code has been a project of the administrative state for 50 years and more. Each tiny complex addition is a source of revenue for the parasites that inhabit DC and environs.

Kevin said...

We could have had a flat tax long ago.

But our elites found that too equitable for their liking.

Ken B said...

The big story. Meanwhile: Uighurs being killed, peace deals in the Middle East, riots in the street, book burnings, covid, the FBI nailed in a conspiracy.

Leland said...

the editors never get around to proposing eliminating loopholes and complexity

Do they ever note that the Republican passed, Trump signed 2017 Tax Cuts and Jobs Act did eliminate some loopholes and complexity? I doubt it, since the NYT wants readers to concentrate on 2010 tax laws.

Sally327 said...

If it's taking too long it could be because the government is waiting for an offer.

The tax code was reformed in 1986. It was done to simplify things. Joe Biden would have voted on that so perhaps in the debate tonight he can talk about what's gone wrong since then.

Mike (MJB Wolf) said...

Well I wonder what the IRS was up to in 2010 that distracted them from their *one job* of accepting and analyzing tax returns. Oh that’s right! Obama-Biden had weaponized the IRS in order to harass and deny service to conservative non-profit organizations. Did the NYT explore how this vast distraction from their duties figured in their incompetence in reviewing Trump’s taxes? Did they offer a mea culpa for their slanderous accusations that Trump was a lying liar who refused to keep his word? After all, he said the taxes were under audit and until finalized were not appropriate to release, since outstanding questions remained unanswered. That was true. The IRS is still stalling. That’s more of a scandal than real estate investments generating more losses than gains.

Static Ping said...

It is nice for the New York Times to champion IRS. Go forth and fight bravely for the most universally despised part of the American bureaucracy! Even the Orange Mad Bad army of newly minted tax experts hate their guts, albeit in muted tones until the tax man is no longer useful to them. Huzzah!

Bobb said...

but the editors never get around to proposing eliminating loopholes and complexity.

Because the NYT and most Democrat politicians talk about how they despise loopholes for the rich, they really cherish them. See, the response to when Trump limited the federal tax deduction for state taxes.

James K said...

And yet when tax simplification proposals like a flat tax are suggested, the NYT goes nuts. You reap what you sow.

tim in vermont said...

When are they going to go after Bezos for taking the payroll taxable salary of a McDonald’s store manager to run Amazon, and the rest of his income as dividends, which are taxed at a much lower rate?

This isn’t about abuse of the tax code by the rich, it’s about getting Trump.

iowan2 said...

My understanding shows the Refund was paid forward to future tax liabilities.

As is pointed out, these are not loopholes. This is tax code. People look at the tax code somehow rewards the rich. Yet the rich, are often highly leveraged, and using that leverage to expand their enterprises, hiring more people, and requiring expanded use of other businesses to support their business. This is the fuel for the engine, that allows us common folk the means to live in nice homes and rear our families.

Fernandinande said...

2019:

"The New York Times shrugs off FedEx CEO’s ‘colorful’ challenge to a tax policy debate"

"In his statement, Smith called the Times story “distorted and factually incorrect” and invited A.G. Sulzberger and his unnamed business section chief to Washington, D.C., to debate him and FedEx’s corporate vice president of tax."

Lucid-Ideas said...

"Profound inequalities in the tax code"

=

Dog whistle we make up and use to suggest to our readership that we, our owners, and thousands of New Yorkers have solidarity with Shaniqua making $16k a year and living with 3 roommates in the Bronx.

VOTE DEMOCRAT!

MountainMan said...

My wife worked from home for almost 15 years as a 1099 contractor doing administrative work for a couple of non-profits. There were numerous tax breaks we could take from being self-employed and working in our house. So it's not just that a lot of tax breaks are available for the rich; they are available to anyone who is in a position to to use them. I think a lot of the anger directed at Trump is form people who are W-2 employees who don't have many tax breaks available, except to put money in a 401(K).

I would like to find out how Joe Biden managed to pay $3.7M in taxes (based on a meme I saw yesterday, I assume it is correct) after spending 47 years in government. The pay of a Senator and the V-P is not that high - most upper mid-level executives in my former employer made much more during that time - that someone could have probably $12-15M in income to support a tax bill that high. We might also ask that question of a number of other politicians who seem to have gotten rich over decades, or less - Obama, Pelosi, and Feinstein to start.

To repeat what some people have been posting on FB - I am much less concerned about Donald Trump's wealth and how he obtained it in the private sector before he entered politics than I am about how so many politicians enter office as middle class and seem to leave it years later exteremely wealthy. How did they do that?

Want to fix the income tax? Simple - get rid of it. Repeal the 16th Amendment. Move to indirect taxes only; non only tariffs and excises but a sales, consumption or VAT. End the government collecting extensive data on private citizens finances and then using it against them and using it to divide us.

The progressives 100 years ago gave us three really bad Amendments - 16th, 17th, 18th. The 18th, fortunately, lasted only 15 years. The other 2 need to go as well.

But it will never happen.

Laslo Spatula said...

" On Tuesday night, when Mr. Trump and his Democratic opponent, Joe Biden, take the stage for their first presidential debate, both men should be asked what steps they will take to ensure that all Americans pay the full amount they owe...."

Convenient that they published an article to tee up their preferred questions for the debate.

Meanwhile, Biden is somehow rich on a public salary.

His son is rich because of his father's public-salary job.

You'd think the NYT would know not to throw Trump in that briar patch.

I am Laslo.

Owen said...

Who writes the Treasury regs? The IRS, no? If they found the regs to be inconvenient, they would change them. They, not the taxpayer, control the rules of the game. Yet here comes the NYT to whinge about systemic inequities as if that just were a fact of life, a piece of the firmament itself; to be cursed and tut-tutted when that suits the rhetorical moment, but not actually ever changed; not much, and not in a programmatic way that aims to shrink the Code by, say, 50% over the next 4 years and thereby put a lot of smart, hard-working people out of work.

As you say, this op-ed is just battlespace prep for tonight's debate. Trump can now be asked, at length and in detail, to defend his practice of sending an army of accountants and lawyers against the honest, trusting government which was somehow talked out of $70-odd million a decade ago and is still trying to determine how to get it back.

By the way, in the current interest rate environment, the IRS could do worse than make more such loans to taxpayers: give them the refund and then start an investigation to recapture it. With penalties thrown in.

Unknown said...

Both parties prefer a complicated tax code (obviously). If the NYT was an honest, populist newspaper they would know this and attack both parties. The NYT is not an honest, populist newspaper.

stevew said...

Libertarians have been proposing to simplify the tax code for as long as I can remember. Steve Forbes had tax code reform - the Flat Tax - as a key plank in his platform 30 odd years ago. The complexity is the result of the super smart Legislators attempts to influence and manipulate the economy, usually in response to some typical, though negative, economic event.

Wince said...

So, Trump has been under a decade-long, contested audit by the IRS, as he said?

I read this as a substantive dead end for the NYT, but a rhetorical cudgel given to Biden to defend his insider corruption flank, timed with the debates.

Trump is in a better position than Biden to argue for tax simplification.

Francisco D said...

First, they suggest that there are too many loopholes in the tax code that rich people take advantage of.

Whenever I hear a Democrat talking about taxing only the rich, I think about how the rich pay for politicians, tax lawyers and CPAs to avoid as much of that tax as possible.

Raising taxes disproportionately affects the middle class for that very reason.

We have a tax issue on the Arizona ballot (Proposition 208) that proposes to tax only incomes above $400K. It is supposedly to raise our rather low teacher salaries. My guess is that most of the money will go to expand the bureaucracy and that they will have to tweak that number down over time in order to tax the middle class.

WK said...

It always seems that the solution is “more funding”.

MayBee said...

Getting the $72.9 million refund also indicates he had paid at least $72.9 in at one point. It isn't that he just never sends money in to the IRS, and it isn't that the government is giving him $72 million of its own money as some kind of amazing pay day.

But YES!! Every single time we hear about a new tax plan against millionaires and billionaires, it ends up hitting the middle class. So let's keep that in mind with Biden's new tax increase.

Finally, it cracks me up that the IRS is not funded well enough to do important audits, but it is funded well enough to harass conservatives applying for 503-Cs, and they have enough time to smash their phones and computers.

YoungHegelian said...

It's 10 years later, and they're still hovering over him, threatening to take it back — with interest and penalties.

And, speaking of things that ought to be illegal...

The headline speaks of "the profound inequities of the tax code," but the editors never get around to proposing eliminating loopholes and complexity.

That's because the NYT's rich liberal buddies work the tax code every bit as much as Trump & his corporation do. "Hollywood accounting", Wall Street money, liberal corporations such as Apple off-shoring corporate profits --- the liberals are up to their eyeballs in it.

You know what side has always pushed for radically simplified tax laws? The libertarians. It's not like it was a topic that ever gained any traction.

gilbar said...

It should not take federal authorities more than a decade to determine whether Mr. Trump has paid the full amount he owes....

and it WOULDN'T have; if Trump was Jeff Bezos, or Diane Feinstein
It's INTERESTING, that folks like Trump, or Rush Limbaugh get audited EVERY YEARS
but folk that are good and proper democrats skate away free

serious question: Did Hunter Biden report his millions in russian bribes as income?
what rate was HE taxed at?

Josephbleau said...

Now the NYT will surely want the perks of union bosses, NGOs, and civil rights outfits to be pursued for collection of taxes on free stuff. How much tax does Jackson and Sharpton pay? How much tax does the Clinton Foundation pay for flying the Clintons everywhere and keeping Chelsea on the board? Did the Clintons pay tax on the art they took from the White house?

Nonapod said...

but the editors never get around to proposing eliminating loopholes and complexity. Why not? Is it because what they want is to get Trump, and changing the law prospectively is irrelevant to that goal?

There are plenty of millionaires and billionaires who read and support the times. And of course there's the owner of the NYT, Carlos Slim. Obviously they want to keep these loopholes to protect their various wealthy benefactors and patrons. But the orange man is still bad. So they propose growing the state more and increasing complexity.

Josephbleau said...

I think the NYT is going to be quietly told to shut up about this by the elites of the Democrat party, including Biden, the ex-senator from MBNA.

DavidUW said...

Pretty sure unless you're guilty of tax evasion, everyone pays "the full amount they owe."

and not a penny more, even NYTimes editorial writers.

gspencer said...

Pssst, Democrat Joe Biden was elected, foolishly by the voters of Delaware, to be their Senator for 36 years (6 elections).

Biden wrote and the voted for those tax laws.

stlcdr said...

Doesn't 'the broken tax code' get brought up every time someone is running for some high profile political position, but the politicians in change - and complaining about it! - do nothing?

M Alazon said...

This whole thing was a setup for tonight's debate.

bagoh20 said...

It is so strange that despite the mess that is our tax code and that millions of Americans have struggled with it for decades that now fixing it is very important. What could be different all of a sudden?

Trump should declare himself a Democrat, tear down a statue, start his own chapter of BLM, and insist on wearing a mask and black hoodies.

stlcdr said...

Didn't Donald Trump effectively simplify the tax code for millions (10's of millions, if not more) such that those overworked IRS agents can spend more time on these obvious (sic) cheaters?

Static Ping said...

Increasing the funding of the IRS (giggle) is not going to help matters. The main problem is much of the tax laws are incomprehensible, especially when it applies to businesses. No one really knows how to properly interpret the laws: not the IRS, not the taxpayers, not the tax accountants, not the Congress critters who voted them into law, and, without a doubt, no one who works for the New York Times. You could draft every accountant in the country and import more from around the world and turn the IRS into the largest standing army in the world, but it wouldn't help. There are theological discussions less arcane, and, frankly, given the nature of tax laws a battalion of exorcists, witch doctors, alchemists, and yoga instructors would probably be more effective.

If you want to simplify the tax code, great! Where have you been for the past several decades? But that's not the tax code that Trump and anyone else running a business has had to deal with for my lifetime. Dear NYT, your concern seems... situational.

bleh said...

An individual's tax returns are a matter of public interest ONLY if you believe the IRS is either totally corrupt or incompetent. And oh yeah the U.S. Tax Court, too, and by extension the federal appeals courts. And, for several years after a return has been filed, the U.S. Department of Justice. All those layers of government would have to be unreliable in order for tax returns to be of legitimate interest to anyone.

If the government has agreed that you've paid what you owe, then that should be the end of it. The public really doesn't understand taxes, especially for rich people. It's too easily manipulated and used to score cheap political points. Imagine if everyone's tax returns were public. You already see what people try to do to others because of their political contributions.

"Crowdsourcing" from the mob to do a tax audit is exactly the wrong thing to do.

BidenFamilyTaxPayerFundedCrackPipe said...

I'm sure Hunter And Joe and Kamala will fix it.

Todd said...

It should not take federal authorities more than a decade to determine whether Mr. Trump has paid the full amount he owes....

This actually begs the question of why the hell are tax laws so complex that it should ONLY require up to a decade to determine if Trump paid all of his taxes?

Why are the tax codes so complex to result in this? Because it benefits Congress to have it so. That is why. That is ALSO why the MSM NEVER ask Congress that question.

You should be able to file your taxes on a friggen post card AND there should be zero corporate income tax.

Jersey Fled said...

One of the dirty little secrets of the IRS is that there are certain parts of the code that they want to leave ambiguous. If they clarify it in the direction of A, it creates certain problems. If the clarify it in direction B, it creates other problems. There are no good choices, so they would rather negotiate on a case by case basis. Or in the case of smaller returns, just accept either A or B and forget about it.

Unfortunately this leaves the taxpayer in no man's land. And if the taxpayer is a prominent person, let's the NYT imply that he is a crook.

Joe Smith said...

I wouldn't line my bird cage (if I had one) with the NYT.

Limited blogger said...

Can't wait to hear Biden explain why this reflects negatively on President Trump.

Amadeus 48 said...

So, is the Daily Caller going to get the Sulzbergers' personal tax returns for the last 20 years and put a story about them on the front page, together with tax information of Carlos Slim and his family, or at least their US interests?

Static Ping said...

I do have to appreciate the chutzpah of the New York Times to expose Donald Trump's tax information - which if it wasn't leaked by Trump himself, which I would not put past him, means they are abetting multiple serious felonies - and then opine about it like they are some neutral party. You can't say they don't have balls. Integrity is long gone and self-respect is a fleeting memory, but they certainly have balls.

BrentonTalcott said...

"Want to fix the income tax? Simple - get rid of it"

QFT

The income tax is an abomination the currency inflating bankers adore, coincidence it arose as the same time as the Federal (not a fucking)Reserve?

Scientific Socialist said...

Do you recall the NY Times article about Joe and Jill Biden's $10 million in S-corporation-generated income in 2017 on which they benefited from a 20% S-corp tax break backed by Trump? Neither do I.

Drago said...

The lefties/LLR-lefties are, and this is completely unsurprising, calling for laws to be modified so that only Donald Trump and his family are targeted, but no one else.

This is all of a piece with the criminalization of standard executive branch actions taken by Trump that only apply to Trump.

The lefties/LLR-lefties began this practice in earnest against Reagan in the 80's and continued on to GW Bush and now it has come to full flower under Trump.

wendybar said...

If we had a flat tax, we wouldn't have this problem and wouldn't have to worry about the Politicians making rules for their donors that benefit them.

Static Ping said...

Oh, and to put a personal spin on this, I occasionally talk with our company's financial accountants. One of them gave me a story that in his previous job they ended up filing a tax return with a questionable interpretation of a tax law. Needless to say, their interpretation benefited their company greatly. The thing is he had no idea if the interpretation was correct, but he also had no idea if the interpretation was wrong either. The law was so ambiguous that no one seemed to know what the heck it meant, including the IRS. So they put a document in the tax return explaining in detail how they came to their conclusion and then waited for the IRS to dispute it or not. The IRS let it stand.

What the New York Times is all hot and bothered about is perfectly normal for complex tax returns. I doubt that the New York Times itself does anything different. Maybe they should do an editorial denouncing their own taxes. It wouldn't be any more knowledgeable than their typical ignorant opinions, but it would at least have some entertainment value.

Bob said...

"On Tuesday night, when Mr. Trump and his Democratic opponent, Joe Biden, take the stage for their first presidential debate, both men should be asked what steps they will take to ensure that all Americans pay the full amount they owe...."

Should read, "that all Americans pay the full amount of what the Times thinks they should owe".

BidenFamilyTaxPayerFundedCrackPipe said...

"More funding" is code for - hike deplorable taxes to pay for the elites like Biden.

tim maguire said...

Mike Sylwester said...New York Times Co. paid no federal taxes

.... the New York Times Co. paid no federal taxes in 2017, despite earning $111 million that year. ...


The New York Times forgot to mention that. Just like when they wrote their editorial in support of the Kelo decision, they forgot to mention that they used eminent domain to secure the land for their new office tower.

n.n said...

Why not? Because NYT has exploited the same "loopholes and complexity" to reduce their tax liability. NYT produces information, misinformation, and disinformation. Trump produces a tangible product with value that varies with economic and social conditions.

Gregory said...

The tax code is a great American tragedy happening in plain sight. Everyone knows it should be simplified and it would be trivially easy to do it, but there are too many rice bowls that would be upset by doing so.

Politicians (left and right) use the tax code for social engineering (hello, mortgage interest deduction). Their power to conduct social engineering draws special interests to the politicians, and those special interests write the checks the fuel the entire machine of politics.

And then there is the accounting industry (to which I belong), for which the complexity of the tax code is a guaranteed full employment scheme.

Remember a few years ago when Bill Gates' dad came out against repealing the so-called Death Tax? The point the leftist media made was "Hey, if the world's wealthiest person's dad is in favor of the death tax, then everyone should be."

What they left out of that story is that K&L Gates (Bill Sr's law firm) made its money in estate planning....an entire industry that exists so that wealthy people can escape the Death Tax. Repeal the Death Tax, and that industry and Bill Sr's firm cease to exist.

It's falsity and conflicts of interest all the way down.

Michael K said...

This is just prep for the debate. Anticipate 10 questions for Trump on his taxes. Zero for Biden. No questions for Joe on Plagiarism.

papper said...

When the government is targeting a $70mm issue, they have sufficient resources to deal with it. The lack of resources causes the government to be more selective in the issues it goes after and who it decides to audit.

Original Mike said...

"You should be able to file your taxes on a friggen post card AND there should be zero corporate income tax."

I'm a proponent of no corporate income tax, but it just occurred to me that maybe ONLY corporations should pay income tax. Eliminate it for individuals.

Of course corporations will get the money to pay the tax from individuals and customers, just as they do now, but this would lift the burden of the complicated tax code off the individual. Let the corporations deal with the tax code. Instant tax simplification!

n.n said...

Who writes the Treasury regs? The IRS, no?

This is analogous to blaming law enforcement, when the criticism is of policy makers, legislation, and regulation (e.g. AG approval of protocols).

JAORE said...

Tax breaks for me.

Nasty, underhanded, questionably legal loopholes for thee.

n.n said...

start his own chapter of BLM

A progressive legacy, and the liberals that diverge aymptotically. Trump is all-American: Pro-Life, Liberty, and the pursuit of Happiness.

Paul Zrimsek said...

I pay what I owe, after deductions of course.
You exploit loopholes.
He is a tax cheat.

William said...

Tax laws and their ambiguities. Depreciation and discounted assets. Could the Times find a more boring scandal? Surely Trump had affairs with other Playboy models or porn stars. I'd like further investigations into this area of his life. Trump must have had a threesome at some point in his life. That would be a scandal worth reading about.

Hammond X. Gritzkofe said...

Every dollar hidden from the government is that much less money to spend on education, roads and research. The rich are benefiting at the expense of everyone else.

1. Guessing the issues between DJT<>IRS are not undisclosed (hidden) income, but rather interpretation of laws and regulations.

2. Every dollar TAKEN by the Government from taxpayers who cannot afford high priced tax return specialists is that much less money the taxpayer can spend on his own needs. The rich are benefiting at the expense of everyone else.

[Expunging the disgusting "And" at start of paragraph} Congress should restore every penny of funding stripped from the I.R.S. since 2010....

No, Congress should produce a simpler tax code. Smaller budget and staffing needed at the IRS, significant increase in productivity for tax payers.

J Melcher said...

In most of the mainstream media coverage it's ignored that Trump and his GOP support in Congress successfully closed a long-established and widely condemned loophole in the tax code. Most economists argued that "State and Local Taxes" (SALT) paid to those governments should not affect the amount paid to the federal government. A tax deduction for SALT was essentially a federal subsidy to the states, and presented a moral hazard. The subsidiary governments faced fewer consequences for bad decisions because the affect of those taxing (and spending) decisions were shifted into the overall federal budget deficit. Trump closed a big loophole.

Closing this loophole particularly affected the very wealthy. Those who purchased mansions and estates could deduct the property taxes paid from their federal taxes. So, the pre-Trump loopholes encouraged taking capital out of ordinary productive investments and putting the funds into extravagant showy property. One might suppose this is at least partly why Hollywood and Broadway celebrities (who tend to own such mansions) dislike Trump.

But in short, Trump has closed tax loopholes. Does the NYT mention this -- behind their paywall, deep in the back pages, anywhere?

wild chicken said...

"If we had a flat tax, we wouldn't have this problem"

First thing to go, EITC and child tax credit. Oh and depreciation, NOLs, carry-forward losses.

Oh wait, flat tax is just the rate. I'm sure that'll clear everything up.

Lmao

Sam L. said...

It's the NYT, which, as I always say, I despise, detest, and distrust the NYT!

Original Mike said...

"On Tuesday night, when Mr. Trump and his Democratic opponent, Joe Biden, take the stage for their first presidential debate, both men should be asked what steps they will take to ensure that all Americans pay the full amount they owe...."

We have that now. It's called fines and jail.

Birkel said...

Loopholes like the SALT deduction?

Alternative headline:
NYT in favor of a graduated flat tax.

Yancey Ward said...

I doubt that Trump is really in danger of having to pay back the 2010 refund. 10 years seems to be well beyond the normal window of statutory time limitations with regards to tax returns.

James K said...

Somehow with all these "loopholes," the wealthy still collectively pay a hugely disproportionate share of taxes. The National Tax Foundation says the top 5% in income pay almost 60% of federal income taxes, and the top 50% pay 97%.

hstad said...

Sorry, I accidently posted my comments on the "rain" article discussion! That's life!

"...So says the Editorial Board of the NYT in "The Picture of a Broken Tax System/Donald Trump’s tax returns illustrate the profound inequities of the tax code and the shambolic state of federal enforcement...."

Yep, with 70,000 + pages in the tax code it is broken. But let me see, Obama/Biden had 8 years to try to fix some of it - crickets. Biden was in Congress for over 35 + years - did he ever endeavor to fix the system - crickets. NY Times 'tabloid' journalism at its finest.

Bilwick said...

If such loopholes were in fact closed, I wonder how many established NYT writers and editors would be happy with the results, come tax time.

What I'm enjoying about the whole Trump tax kerfuffle is how many "progressive" types revert to Calvinism in attacking Trump for not making ENOUGH money. "He's a fraud! He's not making as much as we thought he was! He shouldn't be president!" But then Calvin was a statist too, wasn't he?

walter said...

He got away with it because he's so low profile and the IRS is MAGA Country.

MountainMan said...

J Melcher said... "A tax deduction for SALT was essentially a federal subsidy to the states, and presented a moral hazard. The subsidiary governments faced fewer consequences for bad decisions because the affect of those taxing (and spending) decisions were shifted into the overall federal budget deficit. Trump closed a big loophole."

Exactly. I have been of the opinion that we should remove entirely the state and local tax deductions. If we are going to continue to have an income tax system then the amount of tax you pay should be the same no matter where you live; i.e., if I pay tax on my income in CA and then move to TN, the tax should be exactly the same.

SteveM said...

On the first day of taking the required intro to tax law course during law school, the professor said that the government controls or shapes the population’s behavior through the criminal law and the tax code by deductions (I.e., mortgage interest deduction) and credits. There will never be a flat tax because it would eliminate a way by which the government can impact the population’s behavior.

Matt said...

I see all the W-2'ers at the New York Times and elsewhere now have very strong opinions about capital loss carry over. Sometimes I think the biggest fault line in this country is between those of us who have to pay taxes quarterly and those who get a refund because taxes were taken out of their W-2's.

I wouldn't be surprised if 1099'ers are overwhelmingly Republican and W-2'ers lean Democrat.

Narayanan said...

as has been pointed out in many challenges to IRS >>> income is not defined in any code!

except wage income.

USA does not know how to value producers only drones

wholelottasplainin' said...

Funny, innit, how the NYT can claim the IRS is underfunded, when the latter apparently had plenty of money to fund Lois Lerner's attacks on the Tea Party.

Sebastian said...

"It's 10 years later, and they're still hovering over him, threatening to take it back — with interest and penalties."

That in itself is absurd. If we are to have limited government, it must be limited in time too.

"The NYT editors say that the IRS needs more more funding so it can quickly and aggressively enforce the existing tax code."

But Trump and others like him are already targets of aggressive enforcement. Does the government leave money on the table, given the constraints of the law as written?

"Is it because what they want is to get Trump, and changing the law prospectively is irrelevant to that goal?"

Questions, questions.

"The only thing that relates to Trump is that the investigation is taking too long."

Well, it is, and it's grossly unfair to him.

Greg The Class Traitor said...

"Every dollar hidden from the government is that much less money to spend on education, roads and research. The rich are benefiting at the expense of everyone else."

No. Every government dollar spent on left wing BS is that much less money to spend on education, roads and real, actual scientific research, as opposed to left propaganda disguised as "research". The Left are benefiting at the expense of everyone else.

FIFY

hombre said...

NYT journolists believe like most commie wannabes that other people’s money belongs to the government. Well, maybe next year after the Dems steal the elections.

daskol said...

A few others have mentioned this, but isn't tax reform a huge win for Trump? He closed loopholes that benefit wealthy urbanites in particular: capped the SALT deductions, reduced the amount of mortgage interest that can be deducted and, this is the most targeted and least reported, eliminated the "miscellaneous deductions" used by wealthy people to deduct their investment advisor expenses from their capital gains. That last one is huge in its impact on wealthy individuals, and industry-wide has put pressure on investment advisors to the wealthy. And this hurts only the wealthy, because the deductions only kicked in at very high levels of expense. Not exactly red meat for the Trump crowd, but he fucked the rich urbanites good and hard, and should take a victory lap tonight.

Mike of Snoqualmie said...

During the debate:

Joe Biden: Donald Trump paid little in income taxes despite his enormous income. He's transferred his tax burden to the little guy. There's no excuse for that!

Donald Trump: The Trump Organization followed the tax law as established by Barack Obama and Joe Biden. The tax laws are too complex and require an army of tax accountants to minimize the taxes due. That's what the Trump Organization employs. Ordinary taxpayers cannot afford an army of tax accountants to minimize their taxes. That why we need to repeal the 16th Amendment and implement a national sales tax that exempts food, medicine and clothing. Everything else will be taxable. No more filing annual tax returns. No more disclosing personal information to the Federal government. No more paycheck withholding. Every dollar you earn will be federal-tax free.

bagoh20 said...

The people who most want the tax code simplified are the people who have complex taxes - the rich. Getting their taxes done is time-consuming, expensive, unpredictable, and potentially very expensive if mistakes are made, and all that is totally unnecessary. It's one of the most unpleasant parts of running a business. It means very little to many people who do simple returns. Even a simplified system wouldn't be much easier for them.

Trump should use this as his call to radical simplification. They think he's against it, so when he champions it, watch the enthusiasm disappear.

RobinGoodfellow said...

“Blogger Kevin said...
We could have had a flat tax long ago”

The problem with the flat tax? Not enough opportunities for graft.

Rusty said...

"Every dollar hidden from the government is that much less money to spend on education, roads and research. The rich are benefiting at the expense of everyone else."
The assumption being that government not only knows better about how to spend your money but is more efficient at it. This assumption is, of course, wrong. As an example I give you space X. They are not only cheaper than NASA but are more efficient as well.

Magson said...

In re: Death tax.

Back in the 90's I read a book by the financial advisor Ric Edelmann, and he called it "an optional tax" and said it's extremely easy to set up your finances in such a way as to shield 100% of your assets from said tax. I don't imagine that the "loopholes" have been cleaned up much, if at all, since then.

***

Also fun:

"One thing that’s really unfair about our tax system is that it is rigged in favor of people who have more resources.... Trump has those resources.

I bet he’s got a room full of accountants, and their leader is probably a grizzled old CPA with an eye patch and a raven who sits on his shoulder. The raven also has an eye patch and an accounting degree. This man has wrestled bears, and he’s going to take advantage of every tax break in the US Code for his client....

On the other side ... the IRS has sent their most fearsome auditor against him. This man sold his soul to the devil, and then fined the devil for failing to list that soul as a depreciable asset. When he shows up to audit your company he appears a flash of fire and brimstone as a Finnish death metal band plays his theme song. He is an auditor bereft of mercy, compassion, or pity and beneath his leathery wings serve a legion of IRS goblins who will crawl into every nook and cranny of the Trump Corporation’s P&L looking for errors, and if a mouse [excretes] a turd large enough to unbalance that ledger there will be hell to pay.

Is it unfair that rich guys can employ Gandalf level CPAs and take advantage of more complicated tax laws, while regular people use TurboTax? Yep. But in the meantime, as long as those tax laws are there, the rich guys would be utter fools not to take advantage of them." -- Larry Correia

RobinGoodfellow said...

“Blogger WK said...
It always seems that the solution is ‘more funding’.”

Accept, it would seem, when they find problems with the police.

daskol said...

The people who most want the tax code simplified are the people who have complex taxes - the rich.

Depends on the kind of "rich." Small to medium business owners, yes, they want simplicity. Financial types, either running private capital and/or real-estate businesses, or those captaining large corporations in whatever field but especially big food, love their loopholes. The yeoman rich want a simplified tax code, but the clerisy class who make their living off regulatory compliance and the poobahs of big business love the complexity, of the tax code and all other aspects of regulatory compliance.

Achilles said...

We out here in the real world who pay real taxes have been pushing a flat tax for pretty much ever. But at this point it is not enough.

Payroll taxes have to go.

They need to be replaced by a flat revenue tax of some kind. The demand for low skilled labor is going to diminish rapidly over the next ten years.

As an employer when you pay an employee you add 25-40% as cost to the government to employ that person, but you get to depreciate that nice new robot that doesn't come to work late or stare at the cell phone.

John henry said...

Tim,

How much does bezos get in Amazon dividends per year?

Answer: the identical same dollar amount as Buffet gets from Berkshire Hathaway.

$0

Zero dollars in options, stock grants or anything else.

All bezos has ever taken out of Amazon has been his $89m/yr salary.

Ditto Buffet who used to take $140m or so for decades.

Want to tax bezos wealth? Pass an amendment permitting a wealth tax.

Good luck with that project.

John Henry

John henry said...

Tim,

How much does bezos get in Amazon dividends per year?

Answer: the identical same dollar amount as Buffet gets from Berkshire Hathaway.

$0

Zero dollars in options, stock grants or anything else.

All bezos has ever taken out of Amazon has been his $89m/yr salary.

Ditto Buffet who used to take $140m or so for decades.

Want to tax bezos wealth? Pass an amendment permitting a wealth tax.

Good luck with that project.

John Henry

Michael K said...

The yeoman rich want a simplified tax code, but the clerisy class who make their living off regulatory compliance and the poobahs of big business love the complexity, of the tax code and all other aspects of regulatory compliance.

What would be the point of buying the WaPoo or bribing all those politicians if they don't insert sweet little nuggets for you? It was no accident that Joe was "The Senator from MBNA for 20 years, until they collapsed.

tommyesq said...

The government sets the tax rates and then offers discounts for those who engage in conduct that the government wants to encourage. If Trump really paid no taxes, it means that he was fantastic at doing things that the government (i.e. Obama/Biden, Schumer and Pelosi over the bulk of the relevant time period) wanted him to do.

n.n said...

They need to be replaced by a flat revenue tax of some kind

Perhaps a wealth tax, but that would be, quite literally, a progressive tax, but absolutely low (e.g. 2%).

bagoh20 said...

If everyone paid roughly the same tax they do now, but it required 5% of the time, money, and effort, who would be against that? I think only tax accountants, tax software, and the IRS. All them gain power from the complexity. Everybody else would be infinitely better off, and so would the country. I think it's possible to do.

hstad said...

Sebastian comments...that the NY Times states:

"The NYT editors say that the IRS needs more more funding so it can quickly and aggressively enforce the existing tax code."

Backward! We don't need a larger IRS (more funding) we need to simplify the current ludicrous tax code, which embodies over 70,000 pages. This only serves to increase the power of the bureaucracy and the so - called "experts" who intrepid these IRS tax codes. Simplify our tax system to maybe 3 - 5 tax brackets. By doing so we can save billions by downgrading this over bloated bureaucracy and gain more revenues for the government to boot.

Todd said...

Original Mike said...

I'm a proponent of no corporate income tax, but it just occurred to me that maybe ONLY corporations should pay income tax. Eliminate it for individuals.

Of course corporations will get the money to pay the tax from individuals and customers, just as they do now, but this would lift the burden of the complicated tax code off the individual. Let the corporations deal with the tax code. Instant tax simplification!

9/29/20, 10:42 AM


Nice thought but I would have to vote no. They should not be paying them cause that is just another hidden tax on you and me. I also think everyone should be paying something. None of this "you get back more than you ever put in". Everyone should have skin in the game. I also think that everyone should be responsible for all of "their" taxes. Stop this hiding some of your taxes in your employer's payroll system. Make the individual pay both sides of SS, etc. Most people think they pay too much in taxes but they don't see ALL of the money the government(s) take. If they saw it all, there would maybe be the stink we need to get it changed.

I would like to see a flat tax where everyone pays X percent and there is a "first X" is "free of tax". Remove most/all deductions.

But I would also like to see SS ended. Let those over 55 decide if they want their money back or ride it out. Everyone else gets their money back and it is DONE. You are responsible for YOUR retirement. The government(s) could setup a totally separate system for taking care of disabled, etc. that currently ride in the SS system.

bagoh20 said...

When there are people who pay 1000s of times their per capita share of the nation's expenses and millions who pay nothing, that's slavery. Rich slaves, but working for the benefit of others who take the fruit of your labor by force.

Richard Dolan said...

"'the editors never get around to proposing eliminating loopholes and complexity.' Why not?"

Because the Dems have become the party of the uber-wealthy and the professional classes. Just ask Sen. Schumer who's still trying to restore the SALT deductions.

JAORE said...

No, no no. Every year on April 14, Trump fires up Turbo Tax and enters his information. He hasn't paid a penny in the previous quarters. He uses the (limited) capabilities of Turbo Tax for deductions. Then he writes his check for $750.

C'mon man.

Eric said...

I've often wondered how media companies (esp. newspapers and magazines) can lose money year after year and continue to operate and even sell the company at a positive price. I suspect that the answer is somewhere in the tax code.

JaimeRoberto said...

If Obama could create immigration law by way of Executive Order, can't Trump create a flat tax by EO?

Big Mike said...

Famous science fiction/fantasy author (and former accountant) Larry Correia explains (in his inimitable foul-mouthed fashion) what's going on here.

The money quote:
One thing that’s really unfair about our tax system is that it is rigged in favor of people who have more resources. ...

Trump has those resources. I bet he’s got a room full of accountants, and their leader is probably a grizzled old CPA with an eye patch and a raven who sits on his shoulder. The raven also has an eye patch and an accounting degree. This man has wrestled bears, and he’s going to take advantage of every tax break in the US Code for his client, and do so gleefully, knowing that many of those laws were signed by Barack Obama and Bill Clinton.

On the other side, you know damned good and well that the IRS has sent their most fearsome auditor against him. This man sold his soul to the devil, and then fined the devil for failing to list that soul as a depreciable asset. When he shows up to audit your company, he appears a flash of fire and brimstone, as a Finnish death metal band plays his theme song. He is an auditor bereft of mercy, compassion, or pity, and beneath his leathery wings serve a legion of IRS goblins, who will crawl into every nook and cranny of the Trump Corporation’s P&L looking for errors, and if a mouse so much as shits a turd large enough to unbalance that ledger, there will be hell to pay.

Is it unfair that rich guys can employ Gandalf level CPAs and take advantage of more complicated tax laws, while regular people use TurboTax? Yep. But in the meantime, as long as those tax laws are there, the rich guys would be utter fools not to take advantage of them.

Michael said...

There are no loopholes in the tax law. There are provisions and lots of rules but not one single loophole.

James Graham said...

One fact I remember from a tax course: there are only two crimes in the USA for which there's no statute of limitations: first-degree murder and federal income tax fraud.

n.n said...

2020-09-29 TaxVid - Trump, Biden and Covid Scams

it was specifically Nancy Pelosi and Barack Obama who made his $70+ million refund legal

I guess that NYT hopes to obfuscate their own benefit, while relying on sensational journolism to force an electoral upheaval.

roesch/voltaire said...

This from Zach Carter's article sums it up for me:The Trump family is exactly what the American tax code is designed to create ― an incompetent, intergenerational graft that our government rewards for draining the nation’s resources and destroying social value. Tipping the scales in favor of the rich doesn’t just generate inequality, it creates an inept upper class shielded from the consequences of its errors and granted access to political power.

Nichevo said...

That why we need to repeal the 16th Amendment and implement a national sales tax that exempts food, medicine and clothing. Everything else will be taxable.
9/29/20, 12:30 PM


Housing?

gadfly said...

If only the IRS could be more aggressive perhaps they could have figured out by now whether it agrees with Trump's interpretation of the over-complicated law or not.

As Shakespeare's Prince Hamlet uttered: "Aye, there is the rub."

Since when and from where did the underlings at the IRS obtain the authority to oppose the boss when he told them to back off from his audit?

320Busdriver said...

Maybe there is a point where economic inequality in a society becomes a destabilizing force.
Maybe that’s what brought us Trump.

It’s only been in the last few years that I seem to worry about government corruption and maybe only a few months where I now seem to be concerned about the money and power of the big tech titans. The wealthiest and most powerful seem to enjoy our fixations on the shiny objects they throw at us.

Tyrone Slothrop said...

The rich pay far more than their fair share in taxes

In 2017, the top 50 percent of all taxpayers paid 97 percent of all individual income taxes, while the bottom 50 percent paid the remaining 3 percent.
The top 1 percent paid a greater share of individual income taxes (38.5 percent) than the bottom 90 percent combined (29.9 percent).
The top 1 percent of taxpayers paid a 26.8 percent average individual income tax rate, which is more than six times higher than taxpayers in the bottom 50 percent (4.0 percent).

Drago said...

The Poor Man's LLR-lefty C**** gadfly: "Since when and from where did the underlings at the IRS obtain the authority to oppose the boss when he told them to back off from his audit?"

LOL

Oh, I don't know, probably in the 6 years prior to Trump taking office under the obama administration which used the IRS to harass conservative groups in order to sideline them in 2012.

And if Trump had told anyone at the IRS to back off his audit that would have leaked in 17 milliseconds. In fact, I'm surprised gadfly's lying lefty heroes didn't simply make up that story on their own and leak it to the press like the ukraine phone call smear job.

tsk tsk tsk

Lying lefties falling down on the job.

Drago said...

By the way, I thought I'd share this for gadfly the moron:

Molly Prince@mollyfprince (twitter thread): https://twitter.com/mollyfprince/status/1310682299051257859

"Debt is an investment tool. Trump’s real estate portfolio is mid- to low-leverage with plenty of cash flow over the debt service. He is in no risk of defaulting.

Folks in the media are claiming that bc Trump has more than $400MM in loans maturing over the next few years, he is facing massive defaults and will consequently be desperate to cut a deal.

One the the deals journalists have been referencing is a $100MM loan on Trump Tower (1/)

Trump Tower was valued at $480MM (by a third-party appraiser). That makes the loan ~21% loan to value (LTV). For context, the average securitized loan is 60 - 75% LTV, making this an incredibly low leverage and safe loan.

*For those who care, it's fee simple with full term IO.

The debt service ratio is 2.99x, which means that nearly 3x the amount of cash flow coming from the building alone will cover the debt Trump owes. The building is currently 82% occupied and can hit near vacancy before Trump has to even take a penny from his pocket.

For those bloviating that Trump's a poor real estate investor, this is how great he ACTUALLY is:

Trump can refinance the loan when it matures in 2022 at the same level, OR he can refinance at a standard leverage (i.e. 65%) and walk away with more than $200MM of cash that day."

And to top it off, I enjoyed this comment:

Donald Trump Jr.@DonaldJTrumpJr Sep 28 Replying to @mollyfprince
Narrator: and not pay tax on the cash.

And they are both completely correct.

And gadfly, his maxi-me LLR-lefty C**** and readering are all idiots.

cubanbob said...

One would think that the reporters of the NYT can availe themselves to the CFO of the NYT to explain to them how it works and why their boss also availed himself of the tax breaks largely put in by Democrats and their employer. So the new commie line is that Trump uses the same Hollywood-Silicon Valley accounting their mega donors use.

If the Democrats want real 'reform', abolish the corporate income tax and tax the shareholders on the distributions. As for nonprofits and foundations, tax them at the ordinary income tax on their investment incomes. Do the same for individuals and legal entities and eliminate the tax exempt status of municipal and state bonds and have one rate for all revenue be it capital gains or ordinary income. Tax all personal services as imputed income to the person receiving it from their employer. Hollywood, Silicon Valley and Manhattan will 'love' that and eliminate completely the SALT provision. Finally, eliminate the US tax on worldwide earnings. That way all the wealthy windbags that are always threatening to leave the US will have an incentive to leave the country and thus we won't have to listen to their hypocrisy and further. Let's say the tax rates should be as follows: $0-$100k, 10%. $101-$200k, 15% and everything beyond that at $20% with a basic income of the minimum annual wage as the base that is excluded from taxation. If Trump were to actually propose this the Democrats would shit themselves.

stevew said...

Back when Steve Forbes was advocating the flat tax as a replacement for our ridiculously complicated system of income taxation, he was touting a 13% tax, IIRC. That year I had my return done, I was in one of the highest brackets - then about 35% or maybe 38%. After filling in the form, including listing all the allowed deductions (mortgage interest, business expenses, state and local taxes) I calculated how much I was obligated to pay. The net tax was very close to the 13% of my gross income that Forbes recommended.

Who loses bigly from a simple income tax system? All those "service providers" that calculate and file the returns; oh and the very very rich that have lots of offsetting deductions.

Big Mike said...

@Magson, sorry. I wrote my comment without noticing yours.

DKWalser said...

One of my tax professors defined the term 'loophole' as a tax benefit you don't qualify for. If you qualify for it, it's legitimate.

rehajm said...

"[T]he formidable complexity of the tax code makes it difficult to tell when wealthy taxpayers have crossed legal lines

None of this sounds like situations my MST spouse and the IRS are engaged in and her clients are Trump wealthy and at least as complex if not more so. Way more entities...anyways, fights with IR...esssss are usually about justifying a position and they tend to be resolved with some correspondence and perhaps a meeting or two. The code is complex but it isn't really ambiguous- your accountants screwed up or they didn't

...and is the IRS really still investing him for a ten years old problem or are they talking about the fact all returns with over $1 million in income get eyes on? I suspect the latter...

gilbar said...

John henry said...
All bezos has ever taken out of Amazon has been his $89m/yr salary.


true, but....
Jeff Bezos Sold $3.1 Billion in Amazon Stock This Week

The Godfather said...

Thanks for Drago's comment above. Back in the Dark Ages when I was practicing real estate law, I came to the following conclusion. When the market is hot, any damn fool with money can make a fortune; appreciating values will cover a multitude of sins. But when a recession hits, watch who goes under and who survives. If you are asked to invest with someone who has gone through (say) two recessions and is still standing, you ought to consider the proposal.

I wouldn't (personally) do business with Trump (not that I've ever been in that league) -- but he's still standing, isn't he?