Vincent J. Curtis
3 Oct 2016
The New York Times
is owned by Mexican multi-billionaire Carlos Slim, and in 2014 the Times “avoided” paying taxes in
2014. In fact, it received a tax refund
of $3.5 million, despite reporting a profit of $29.9 million.
The newspaper explained that most of the profit arose because the statute of limitations came into effect in regards to tax
liabilities that the Times’
accountants had identified. The Times had set aside $21.1 million to cover
taxes and penalties from previous years should the IRS come after them. The IRS did not, and after the statute of
limitations kicked in the Times could
transfer that $21.1 million from reserves-for-liability to realized profit. An additional $8.8 million in FY 2014 brought
the total profit to $29.9 million. Yet, through
the legerdemain available to through the tax code, the Times still managed to obtain a tax refund of $3.5 million.
The ordinary tax filer is probably astonished at the scale
of these figures and at the possibilities available to large corporations to
shield themselves from taxes. But this
information is useful to understanding the allegations that the Times published on the weekend, that
Donald Trump reported a loss of $916 million in 1995 – twenty years ago – and breathlessly
speculated that Trump “could have avoided paying taxes for eighteen years!”
Donald Trump has amassed a business that is twenty to fifty
times larger than the New York Times,
considered as a business. So Trump’s
numbers are going to be twenty to fifty times larger than those of the Times.
Trump has not denied the reported loss of $916 million from twenty years
ago, so let’s assume that the leaked information is accurate. What does it mean?
Straightaway it means that twenty years ago Trump was worth
at least a billion, since this is what he lost and he didn’t go bankrupt. Secondly, the IRS accepted the loss as a
valid business expense. So it was legal.
Trump was clever about how he amassed the loss. He swept together a number of smaller losses
incurred across his empire over a number of years, and reported them all in one
big lump. The IRS accepted it. Trump’s personal tax liabilities would resume
when his income after expenses exceeded $916 million, and starting in 1997 he
had eighteen years to earn back that loss before the income credit lapsed.
The U.S. tax code is a large and complex thing. Over decades tax programs and incentives have
been put into the code to either encourage or discourage certain economic activity. Often, sections are put in simply so that
large tax donors to Congressmen and Senators can reap large profits without
having to share much with the U.S. Treasury.
The Congress justifies some tax deferment on business as an “investment”;
that it will pick up taxes on the workers that the business employs, or on
other taxes the business incurs as a result of its activity.
The oil companies in America paid about $80 billion in taxes
in 2012, and yet received $4 billion in refunds (netting $76 billion to Uncle
Sam) as a result of exploration tax incentives in the tax code. This $4 billion President Obama has often referred
to as a tax “loophole.” The complicated
tax code was assembled over decades without reform and is the product of
competing interests.
Its complexity is why large corporations have large
accounting departments. Businesses have
a fiduciary responsibility to its shareholders to maximize profits, minimize
taxes, and stay within the law. It is by
no means patriotic for a business to pay more in taxes than necessary – just ask
Warren Buffett who wants to pay more but won’t until the law requires it. Buffett knows he can do more for the American
economy than the U.S. government can with the money he would pay in taxes. That is why his conscience won’t let him pay
more.
This is the world Donald Trump worked in for over forty
years. He has gained a lot of
information about the tax code, probably far more than a typist for the Mexican
Times, who has to reach for his
dictionary of superlatives to describe his feelings towards all things
Trump. Big league business is a daunting
thing to a small-time typist. The fact
that business thinks it can do better for America by reinvesting its returns
into more business is hard to fathom. It
simply doesn’t occur to the typist that if the Times had had to pay $3.5 million in taxes instead of receive it,
he might not have a job. At least a
paying job.
Meanwhile, Donald Trump joins a long list of Republicans
whose confidential information was leaked to the media. National
Review recalled today that George W. Bush had his Yale transcripts leaked,
Joe the Plumber had his private government files checked by a government
employee. Michael Steele had private
information leaked about the time he was running for chairman to the RNC. Rick Perry had his college transcripts
leaked. Pennsylvania Attorney-General
Kathleen Kane was convicted of leaking confidential investigative information
on a political opponent. And you wonder
why Republicans don’t care if the Russians are focussing on the Democrats?
The leaking of confidential tax information of Donald Trump
from twenty years ago give small time typists the opportunity to impress
gullible and small-minded people with their skill at breathlessness and
hyperbolic speculation. But the typists
and their gullible victims never stop to ask themselves whether they themselves
would take a legal tax deduction and pay less to Uncle Sam, or not take it, pay
more in taxes, and not feed the animals for two weeks. You would feel really patriotic about it.
The Mexico Times
is running twenty-year old stuff on Trump because they don’t want to run stuff
on Hillary and family’s corruption from the last eight years, and on which the
statute of limitations has not run out.
-30-
No comments:
Post a Comment