In light of the revelations over President Trump's tax returns, a few thoughts: (1) The leak of this private data is a crime. While the content of the leaked material may be newsworthy, illegal leaks must be punished. I'm also not sure the supporters of a man who gleefully repeated the content of leaked DNC emails four years ago, and who 'jokingly' urged the Russian government to engage in additional hacks, are in a particularly strong position to claim deep umbrage over this. Trump could also have ripped this bandaid off years ago by releasing his returns, as is customary. For reasons of transparency, I've favored him doing so all along. Also, if the Times story is 'fake news' and not the whole story, as he claims, Trump is still welcome to release the documents himself. His go-to excuse dating back to 2015 is bunk, according to the IRS.
(2) The leaked tax returns paint a picture of a man whose actual financial success is pretty far removed from his self-cultivated folklore about being a genius businessman. He has suffered extraordinary financial losses, is leveraged up to his eyeballs, and has relied on massive write-offs and 'creative' accounting, over many years. But much to the disappointment of a certain cadre of true believers, Trump's taxes do not "reveal any previously unreported connections to Russia," the Times reports. So he's a chronically under-performing, endlessly braggadocious, loophole-exploiting non-secret agent of the Kremlin. Is anyone surprised by any of this?
(3) The heart of the Times report is Trump's tax avoidance, which is legal, but perhaps blurs a few lines. This is difference than tax evasion, which is a crime. If they could nail him for a crime or a special Moscow connection, they would. Instead, we are left with passages like this:
Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750. He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made...By their very nature, the filings will leave many questions unanswered, many questioners unfulfilled. They comprise information that Mr. Trump has disclosed to the I.R.S., not the findings of an independent financial examination. They report that Mr. Trump owns hundreds of millions of dollars in valuable assets, but they do not reveal his true wealth.
The fact that Trump has used enormous losses and other write-offs to avoid large tax bills (or owing any personal income taxes whatsoever in a number of years) may help make a compelling case for a flat tax. It may also resonate with average Americans who pay more in taxes than this self-described, high-flying billionaire, as many journalists are arguing and hoping. But it's not news. Indeed, this was an issue in the 2016 presidential election, too. Trump admitted to not paying any income tax for a number of years, a fact that Hillary Clinton sought to exploit in a nationally-televised debate, in front of tens of millions of viewers:
Donald Trump said he’s “smart” by not paying income taxes — and argued that if he did, the money would be “squandered.” Trump’s jaw-dropping statements came after Hillary Clinton launched a fiery attack on the Republican presidential nominee for breaking a four-decade tradition of White House aspirants releasing their federal income tax returns. “The only years that anybody’s ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license, and they showed he didn’t pay any federal income tax,” Clinton said. Trump quickly retorted: “That makes me smart.” Later, when Clinton told Trump was that “maybe ... you haven’t paid any federal income tax for a lot of years,” the real estate mogul, who claims to be worth up to $10 billion, said that he was a better steward for his money than the government. “It would be squandered, too, believe me,” Trump said.
Here was a resulting headline in...the New York Times, from October 2016: "Donald Trump Acknowledges Not Paying Federal Income Taxes for Years." Other stories on this front have already been written, including this one from 2016 and this one from 2018. In other words, someone committed a crime to provide the news media with private official documents that confirm what we already knew, with a bit more detail and color, but without providing much in the way of 'bombshells.' Perhaps this story will hurt Trump more this time around, in a way that it did not four years ago. Perhaps more working Americans will be aware of this issue and will resent paying more in federal income tax than a famously rich person (the Biden campaign is already out with an ad pressing this case). Or perhaps it's already baked into the cake.
(4) We're already getting a sense of how the president will respond to challenges on this issue when it inevitably comes up at tomorrow's debate. Beyond the typical talking points, Trump may want to make a few additional points. First, the Biden family has used tax avoidance strategies to avoid owing and paying a significant chunk of taxes -- including those that fund "priorities" that Biden brags about supporting:
Mr. Biden’s objections might be more persuasive had he and his wife, Jill, not gone out of their way to avoid funding seniors’ entitlement benefits. According to their tax returns, in 2017 and 2018 the Bidens...avoided payroll taxes on nearly $13.3 million in income from book royalties and speaking fees. They did so by classifying the income as S-corporation profits rather than taxable wages...they circumvented the payroll tax on the nearly 95% of their income that remained. A tax expert interviewed by the Journal in 2019 called the Bidens’ scheme “pretty aggressive”; another told the paper it served solely to avoid the payroll taxes...Of the taxes the Bidens avoided, 2.9% of their income, around $385,000, would have funded Medicare. The other 0.9%, nearly $120,000, was part of ObamaCare and fund that law.
Maybe more significant to average voters is the fact that President Trump has cut taxes across the board for every income group in America, leading to gangbusters employment and wage growth. Nonpartisan experts say Joe Biden's tax plan will raise taxes on the vast majority of Americans, across all income groups, on average. Donald Trump probably isn't excited to be discussing the issue of his tax returns at this stage of the race, but 'Joe's a hypocrite because he avoids paying taxes too -- and I've actually cut your taxes, whereas he's going to raise them' isn't a terrible comeback.
(5) Because this episode has caused some lefties to recycle warmed-over and chronically false talking points about "the rich" and "fairness," I'll leave you with these reminders:
Seeing a lot of "The Rich Don't Pay Taxes" takes tonight. So let's go to the CBO, IRS, and OECD data.— Brian Riedl ?? (@Brian_Riedl) September 28, 2020
These are based on actual taxes paid - including loopholes.
Clearly, federal tax rates rise significantly with income. (1/) pic.twitter.com/aXphbkDO2f
And the top-earning 20% pays 87% of all federal income taxes.— Brian Riedl ?? (@Brian_Riedl) September 28, 2020
The top-earning 40% pay 101% of all federal income taxes. (4/) pic.twitter.com/Sr3PnSdzgN