The leak of some of Donald Trump's tax returns highlights enormous disparities in the tax code between high-income businesses and individuals and everyone else that may have allowed the Republican presidential nominee to avoid paying federal income taxes for nearly 20 years.
Trump claimed more than $900 million in losses in 1995, enough to legally reduce his tax bill to zero for as many as 18 years, the New York Times reported on Sunday after receiving three pages of what appeared to be Trump's tax returns filed in three states that year. Trump has broken with precedent and refused to release his tax returns during his presidential campaign, making it impossible to fully assess his finances and history of tax payments. But the 1995 loss likely lowered his future payments significantly or eliminated them altogether, because provisions in the tax code let businesses deduct losses from future income, decreasing the amount they and their owners will owe to the federal government in coming years.
"The tax code treats very rich people who own businesses differently from the way it treats everyone else," said Neil H. Buchanan, an economist and tax law professor at George Washington University, noting that people can't deduct losses on their homes even when they sell them for less than the purchase price.
The tax code allows this differential treatment — and other loopholes — to spur investment and job creation, said Howard Gleckman of the nonpartisan Tax Policy Center. The problem, he added, is that some of these loopholes are nonproductive tax shelters and the real estate industry is notoriously full of them.
One example comes from the real estate industry rules that Trump may have used to lower his tax burden. The 1986 tax reform wiped out many loopholes but preserved the ones for real estate investors after the industry lobbied furiously, he recalled.
"These are loopholes not because Congress figured them out, but because the companies lobbied for them," McIntyre said. Modern-day examples are provisions that allow Apple, Google and other companies to avoid paying federal taxes by stashing profits in off-shore subsidiaries.
http://www.msn.com/en-us/news/polit...ows-disparity-in-system/ar-BBwUW1C?li=BBnb7Kz
Trump claimed more than $900 million in losses in 1995, enough to legally reduce his tax bill to zero for as many as 18 years, the New York Times reported on Sunday after receiving three pages of what appeared to be Trump's tax returns filed in three states that year. Trump has broken with precedent and refused to release his tax returns during his presidential campaign, making it impossible to fully assess his finances and history of tax payments. But the 1995 loss likely lowered his future payments significantly or eliminated them altogether, because provisions in the tax code let businesses deduct losses from future income, decreasing the amount they and their owners will owe to the federal government in coming years.
"The tax code treats very rich people who own businesses differently from the way it treats everyone else," said Neil H. Buchanan, an economist and tax law professor at George Washington University, noting that people can't deduct losses on their homes even when they sell them for less than the purchase price.
The tax code allows this differential treatment — and other loopholes — to spur investment and job creation, said Howard Gleckman of the nonpartisan Tax Policy Center. The problem, he added, is that some of these loopholes are nonproductive tax shelters and the real estate industry is notoriously full of them.
One example comes from the real estate industry rules that Trump may have used to lower his tax burden. The 1986 tax reform wiped out many loopholes but preserved the ones for real estate investors after the industry lobbied furiously, he recalled.
"These are loopholes not because Congress figured them out, but because the companies lobbied for them," McIntyre said. Modern-day examples are provisions that allow Apple, Google and other companies to avoid paying federal taxes by stashing profits in off-shore subsidiaries.
http://www.msn.com/en-us/news/polit...ows-disparity-in-system/ar-BBwUW1C?li=BBnb7Kz
