Playimg the Trump Tax Game
The decision of Donald Trump not to release his tax records leads to far more publicity and speculation, than if he had just released them. The game is one that Trump himself has initiated in the past in speculating on Barack Obama’s birthplace and called the Birther Movement. If I remember correctly, he had convinced a third of Republicans that Obama was not born in the US. Trump also called for then candidate Mitt Romney to release his tax forms, which Romney eventually did. He also speculated, along with Fox News, that the FBI review of Clinton’s emails could result in charges.
When Romney recently called on Trump to release his tax forms, I thought he was just playing a payback game. Romney also claimed that there might be a bombshell there, which I wrote off as just part of the NeverTrump movement. It was only just recently that I recalled that Romney’s business was constructing off-shore tax dodges for millionaires. Romney, more than anybody, would know all of the tax exemptions, dodges, and loopholes available to a billionaire in the real estate business. When he warned of a bombshell there, he knew what he was talking about. In my opinion, the revelation to the voting public that Romney’s business was providing off-shore tax dodges hurt him in the election. The other think that hurt was the surreptitious taping of his belittling the 47% he saw as depending on the government and not paying any income tax. Many of these people work but have low enough wages not to pay income tax. An increase in the minimum wage would help these people and they would be glad to make enough to pay taxes. This is not in Trump’s or the Republican’s plans. These workers also pay payroll taxes for their future Social Security and Medicare. They also pay state income tax, state and local sales taxes, and property taxes.
What Trump actually does with his billions is of little importance to the vast majority of citizens, since his world of high finance real estate, television stardom, evaluating the value of his name, etc., has nothing to do with our daily finances or tax situation. Of much more importance to the public is his tax plan for the public, whether he is going to run up the national debt or make severe government cutbacks, whether he is going to help trade and jobs or destroy them, whether he is going to precipitate an expensive war, and whether he is going to protect social security and medicare, as well as our health plans.
Dana Milbank of the Washington Post points out all of the special tax exemptions available to real estate developers, including depreciation of the real estate value, and the deductibility of interest payments. Another article pointed out that in order to get a building built in city, the city had to guarantee $400 million in tax exemption over a 40 year period. Another pointed out that if there was a loss in the investment, the investors would suffer, but not the Donald. Trump also fights over the value of a property on which property taxes have to be paid. This can range over a factor of 30. There is also the value of the Trump name, which he uses to boost his worth, but not his taxable wealth. Trump can have his income taxed as capital gains at only 15%, instead of the income tax highest rate of 39%. Trump himself claims that he uses all available tax exemptions to pay the minimum taxes possible.
The use of tax exemptions is a supposedly, perfectly legitimate, aspect of the tax game. However, one thing that can cause an audit and delay a settlement is that the tax laws and their interpretation require the existence of tax courts and a bevy of lawyers to argue the cases. Another, as shown above, are the disputes over the evaluations of properties. Further, the tax exemptions do not arise from the basic constitution, but are passed or slipped into bills by friendly congressmen. These congressmen are probably well funded by the parties interested in having them for their own tax situation.
It was also revealed by the Washington Posts’s Drew Harwell that Donald Trump had to release his 1978 and 1979 tax forms to the New Jersey gambling commission to get a gaming license. These showed the surprising result that he actually paid no taxes for those two years. The fact that a gaming commission could elicit his tax returns, but not the public, or the voters in his quest to become our president, is interesting.
I think that the question here is not how Trump’s tax lawyers minimize his taxes, but whether we want billionaires to have all of these tax exemptions. That is what really should be examined.
The general public is not going to be able to understand the hundreds or thousands of pages of Trumps’ tax returns. His effective tax rate and if he pays any taxes for a given year are the only data that would be useful, and these do not require a detailed account of his returns. Most of his tax exemptions are of no use to average tax payers. If he wanted to release these simple data, he could easily do so.
The end of the Trump Tax Game is probably that he uses ALL of the tax exemptions available to him, and, as with most billionaires, pays a very low tax rate.
It is only by not disclosing these two bottom line data, that this will remain an issue for the next six months.
Here is another surprise in the waiting: to avoid the appearance of conflicts of interest, all Presidents have put their businesses and investments in blind trusts. In Trump’s case, that would be a trust run by his family, which he obviously sees or communicates with every day. Since the release of his tax returns is only a voluntary contribution of openness and exposure of where he may have conflicts of interest, and Trump has refused to do this, he may be the first President who also refuses the voluntary act of putting his business in a blind trust, or disclosing areas where he may have a conflict of interest.
May we live in interesting times!