EDITORIAL: Trump tax story highlights need for simplification
Democrats have made little effort over the years to simplify the rules and have, in fact, fought such efforts.
September 28, 2020 - 9:00 pm
President Donald Trump blasted The New York Times on Sunday for its lengthy piece on his tax returns, calling it “fake news.” But it wasn’t fake and it was news. And Mr. Trump could have saved himself the aggravation by releasing his tax returns during the 2016 campaign.
The timing of the report is unquestionably intended to damage the president right before the election. But Mr. Trump could have defused this issue years ago by simply following precedent and making the information public. Instead, he attempted to delay the inevitable. That was his right, of course — there is no law against a presidential candidate keeping his IRS filings confidential — but now he’s forced on the defensive.
The media’s big takeaway from the report is that Mr. Trump paid just $750 in federal income taxes in 2016 and 2017, while effectively claiming no liability in 11 of the 18 years that the Times had access to the illegally leaked records. But — assuming there isn’t much more to the story, as there probably is — that’s not entirely accurate. The newspaper notes that in 2016 and 2017, Mr. Trump “requested an extension on his 1040” and “made the required payment to the IRS for income taxes he might owe — $1 million for 2016 and $4.2 million for 2017.” Much of that money was eventually applied to future liabilities.
It’s important to note that the president’s returns reveal nothing illegal. Many times he used business losses, renovations and investment credits to offset income. “It’s not immediately obvious that this is odd for an active real estate investor,” the Tax Foundation’s Karl Smith told the Times. “Especially doing renovations. This activity can be an enormous cash suck with very long payout horizons. (It’s) totally conceivable that a successful active investor could be cash neg their whole life.”
Nor is it any great bombshell that Mr. Trump used every tool in the tax code to minimize his obligations. Virtually every filer who itemizes does the same, regardless of income level.
If the members of the Resistance seek to point fingers over the Times revelations, perhaps they should set their sights on Congress, which writes and makes tax law. The complexity of the tax code is a boon for the wealthy and their accountants, but Democrats have made little effort over the years to simplify the rules and have, in fact, fought such efforts.
Let’s also remember that as Democrats bludgeon the president over the Times’ story, they’ll be actively campaigning to restore the lucrative tax deduction for state and local income taxes, a write-off that primarily benefited the rich in blue states and was vastly restricted under the Trump tax reform passed in 2017. Go figure.