Tuesday, October 4, 2016

Trump's chumps: No taxes makes me smart, paying taxes makes you ...

You, likely one of Trump's chumps, can fill in the blank with whatever word[s] you wish to use.

David Cay Johnston explains Trump's billion dollar tax dodge in the Daily Beast, Art of the Steal: This Is How Trump Lost $916M and Avoided Tax. This is how Donald Trump’s accountants and lawyers most likely used the tax code to avoid paying income tax for almost two decades. Johnston, FYI, is the author of the August 2016 book The Making of Donald Trump.

Trump, the only major-party presidential nominee in four decades to keep all his tax returns secret, insists “there’s nothing to learn from them.”

Yet in one day I figured out how Trump’s advisers almost certainly arranged the massive tax losses, skipped out on a massive income-tax bill, and then fashioned a loophole with more valuable tax benefits than the already liberal tax breaks Congress gives big real-estate owners while sticking others with the bill.

Here's just part of the story on how Trump managed this deal steal.

The story of Trump’s income tax-free life begins in 1990 with Trump’s well-documented mismanagement of his casinos and his admission that he paid far too much for “trophy properties” like the Plaza Hotel in Manhattan and 23 worn-out jetliners for the short-lived Trump Shuttle airline.

These mistakes created about $1 billion of “net operating losses,” or NOLs, under Section 1231 of the tax code.

NOLs are incredibly valuable. These tax losses can be used to offset salaries, business profits, and income from, say, a television show or making neckties in China. Thanks to his $916 million of NOLs, Trump could earn much over 18 years in salaries, profits, and interest, but pay no income taxes.


So while Trump made money at every turn, the banks that lent him money, the workers and small businesses who delivered for Trump, and the investors in his casino company all got stiffed. And while they paid taxes on whatever income they did manage to collect, Trump enjoyed at least $916 million of tax-free income.

In the first debate with Hillary Clinton, Trump did not dispute her statement that he pays no income taxes. Instead he said it shows he is smart.

That may be, but it also suggests the rest of us are chumps for paying our taxes while Trump enjoys all the benefits of the United States government—little things like individual liberty, the FBI, and a military to protect us—while bearing none of the burden. If we all did as Trump does, we would, to quote a line Trump employs often, not have our country anymore.

And about that casino?

Trump claimed to be worth billions in 1990, just as he does now, yet he could not pay his bills. He stiffed hundreds of small-business suppliers, including those for the Trump Taj Mahal casino in Atlantic City, which will go out of business next week. In all he owed more $3 billion, nearly a third of his debt secured by nothing more substantial than his signature on bank loan papers.

Last May, Trump revealed that he took on debt with no intention of paying it all back, which strikes me as fraud. “I’ve borrowed knowing you can pay back with discounts,” he told CNBC in May, boasting “I’ve done well with debt.”

Indeed he has. And his surrogates tell us that Trump's steal makes him not just smart but a genius. And that makes those of us who honor our tax obligation, who pay our fair share to make this country work, chumps.

h/t AZBlueMeanie

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