Trump vs. The Tax Code
By Gary Silverman, CFP®
The election is over. Anyone who knows me also knows that I wasn’t in favor of either candidate. For reasons I’ll cover sometime next year, I think that the schism between the left and the right of the political spectrum will continue. But that’s for later. Today I want to talk about a pet peeve of mine during the election, the denunciation of Trump for his declaring a large tax loss two decades ago and his using that loss to eliminate taxes for years going forward.
What, exactly, did you want him to do?
Trump was, as far as anyone can tell, following to the letter the tax law of the United States. Now, if by following the law you can find a way that allows you to pay no taxes you’d be a fool to instead find another way to pay more taxes. In fact, I’m guessing that the majority of my readers pay taxes. Come tax time, you comb through the rules and regulations (or hire a tax adviser) to find ways to pay less taxes. I’ve yet to have someone come to my office asking for ways to pay more taxes.
Do you do this because you want to rob our armed forces of the equipment they need to defend us? Maybe your aim is to provide less money to care for disabled veterans? Or maybe you want to remove funds used to help children in Head Start or provide fewer funds for college. My guess is that these are not your motives.
For some reason we get the idea that if some rich dude finds a way to use the tax code to lower his taxes, that is evil; while when we do the same thing it is just being smart and prudent.
“But it’s not fair,” you may say. “The rich don’t end up paying any taxes and the poor pay way too much!” The facts don’t bear this out. The more money people make, the more income taxes they pay both in absolute terms and by percentage, while the poorer segments of our population end up getting back more than they pay in. There are exceptions, to be sure, and Trump may be one of them; but that doesn’t change my argument.
Now, whether things are fair or not is a matter of opinion as I’ve examined in several columns over the years. My point isn’t to decide if the tax code is fair or not, but rather whether it was right or wrong for Trump to pay no taxes for many years. I think he was right to do so. And, judging by his getting through a myriad of audits over those same years, it seems that the IRS agrees with him.
So, if we don’t like the results, let’s not blame it on Trump or other rich folks—let’s put the blame where it belongs...on the tax code itself.
What is also true is that rich folks can use their money to garner influence with Congress to have them create the laws that allow Trump to get away tax-free. But if the majority of voters demanded that Congress make the system more “fair” or lose the next election, my guess is they might listen.
This article was published in the Wichita Falls Times Record News on November 20, 2017.