Which Should Americans Be Angrier About: Trump or the Tax Code?

[KamaAina]

Answer: Yes.

http://www.theatlantic.com/business/archive/2016/10/which-deserves-more-scorn-trump-or-the-tax-code/502766/

It’s possible that Donald Trump didn’t pay federal income taxes for nearly two decades. That’s the major takeaway of the portions of Trump’s tax returns recently leaked to The New York Times. The documents show that in 1995, Trump reported a nearly $1 billion loss from his businesses—a loss large enough to have potentially allowed him to earn an average of $50 million a year, tax-free, for 18 years.

Trump’s massive 1995 loss likely comes from a combination of factors: hard times at his casinos in New Jersey, a failed airline business, and the need to unload some real-estate holdings at prices lower than what he purchased them for. In 1992, Bloomberg chronicled the dire straits of Trump’s empire, characterizing it like this: “The name is a punchline now, associated with the worst of 1980s extravagance, egomania, and greed. Once, the world marveled at the scope and mastery of Trump's megabuck deals. Today, he's widely regarded as a washed-up real estate mogul who has been stripped of his once lustrous possessions.”...

So how might this add up to income-free earnings for nearly two decades? Trump used a provision of the tax code that allows businesses to transfer their tax payments to their owner’s personal tax returns, which in most cases are subject to lower tax rates. This tactic, in which the business becomes what the tax code calls a “pass-through entity,” has been contentious for years, with some—including Trump—saying that it helps small businesses avoid onerous corporate taxes. But suggesting that pass-through provisions mostly benefit small businesses is misleading, says Harry Stein, the director of fiscal policy at the left-leaning Center for American Progress Action Fund. “Most passed-through income, 70 percent, goes to the top 1 percent,” Stein told me....

By preferentially blending bits and pieces of the corporate and personal tax codes, Trump might have gained important financial flexibility that simply isn’t available to most people. “Wealthy people can game the system in a way normal people can’t,” Stein says. Corporations, for instance, are allowed to time their reporting of losses in ways that are beneficial to their bottom line. For instance, Trump could have had his businesses wait to report losses until a new calendar year, in order to help offset gains and reduce his overall taxable income at a more advantageous time, Stein said. And the rules on net operating losses allow an individual to report a loss that will offset income for several years, which could also result in a lower tax rate for owners. These are all options not available to individuals who might make vastly different amounts every month or year. Trump also could have received preferential tax treatment on his real-estate holdings when it came to reworking the loans he owed to banks, Brown added.

[CBGLuthier]

1. We should be angry at the bastards who sold us cheap. The laws were written to favor the wealthy

by both democrats and republicans.