The Democrats seem to not want to relent on the desire to see President Trump’s tax returns. They will tell you it is all about good government or that it is tradition. We need open government. They think Mr. Trump is hiding something. I am advising him now he should just come out and say he isn’t turning them over – deal with it. Let me explain why.
The biggest reason is that his tax returns are so complex that very few people could ever understand them. They are most likely littered with hundreds of entities that flow through to his return. He may be the owner of some regular corporations that don’t even appear on his personal tax return that are only taxed at the corporate level. If he owns many partnerships, Limited Liability Companies (LLC) and Chapter S Corporations -- where these entities have their income taxed on an individual’s tax return -- one cannot tell anything from his personal tax return about these entities other than Trump’s share of income or losses. You can’t tell how much he owns, how much he invested, how much they are worth, what tax treatments have been used or who else owns the company with Mr. Trump.
But the press and his enemies would act is if they do understand. I assert they are next to clueless. When working on writing this column I wanted to find some examples, which are ubiquitous, and it did not take very long. That is because Mr. Trump released the beginnings of his tax plan and the anti-Trump press took a nanosecond to attack.
Catherine Rampell, syndicated Washington Post columnist, was formerly an economics journalist for the New York Times. She is a Phi Beta Kappa graduate of Princeton. I am not sure whether she chose to write the column that was published on Friday, April 28 entitled "The Dumbest Part of Trump’s Dumb Tax Plan" or whether she was assigned to write on the topic, but I can tell you she should not be calling anyone dumb.
She wrote about Trump’s proposal to have income from pass-through entities taxed at 15% on a person’s tax return. She goes on to write “For those unfamiliar, pass-through income refers to business income that gets paid at individual income tax rates rather than corporate ones. Income earned by partnerships, sole proprietorships and S-corporations — the vast majority of all companies — falls into this category.”
First, sole proprietorships, which according to the IRS are the most prevalent form of business entities in the U.S., are NOT pass-through entities and would not be affected by this plan. Second, partnerships which have been around forever have never been taxed at anything other than individual rates; thus, saying they are not taxed at corporate rates is like saying pistachio ice cream does not taste like chocolate ice cream. It is wrong and a misnomer. Third, she leaves out LLCs which have become the most prevalent form of pass-through entity, though the newest on the tax scene.
And this went through an editor. It is just one paragraph in the column and it is just one of many columns written with misinformation from uninformed journalists.
This is not to pick on Ms. Rampell, whom I have never met, more than anyone else. I regularly listen to panels on TV news shows when they talk about economics or taxes. The panelists who are generally journalists feel compelled to say something because that is what they get paid to do. Most of them are very smart most of the time. They will remain nameless to protect the guilty. What comes out of their mouths is more often than not clueless. Just once, I would like a panelist to say “I haven’t got a clue -- I have someone do my taxes for me and I don’t want to say anything stupid.” But that is a dream, isn’t it?
The Anti-Trump journalists will attempt to resolve this by bringing in an “expert.” It quite often will be a tax lawyer from Dewey, Cheatum and Howe who has no clue about actually preparing a tax return. I cannot tell you how often I get a tax structure from a smart attorney and then we sit there and say, “That is great, but how do we enact that?” But the tax attorney has to show they are a sophisticated smarty-pants and they are being quoted either in the NYT or WaPo and must come up with something. They will say something that bedazzles the clueless journalist and it will make print, but only as long as it achieves the goal of attacking President Trump.
There are only two things that could be realized by looking at Trump’s tax returns. First, what the overall tax rate on his reported income is. Second, how much he has given to charity in personal checks or donated goods.
The charity question is more complicated. David A. Fahrenthold won a Pulitzer Prize for damning Trump for overstating his charitable giving. Some of what he says has validity. But I have also read of the many events that Mr. Trump has hosted at his various hotels and at Mar-a-Lago. Those in-kind contributions would never register on his returns. Trump’s enemies have no basis to attack Trump about the issue of charity since few, if any, went after Al Gore and his measly charity.
Trump’s enemies dream of when his tax return will say “Big income from Russian Oligarch.” They don’t want the tax returns for good government and they will never understand them. They only want candidates to run for office who have W-2 income, mortgage deductions and charitable contributions. They don’t want anyone in government who actually made something of themselves financially unless it is a book deal. Now that is legit income. Even if it is $245 per book a la Andrew Cuomo.
No good can happen from Trump releasing his returns to his enemies. The public does not care. We had an election and they did not seem to care. If the public cares so much they can elect someone else in three and a half years. Senator Schumer should stop saying the business of the country and tax reform is held up because of the need to see Trump’s tax returns. Grow up and do something right for the country instead of creating false narratives.
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