Many were upset when the NY Times printed stories revealing Trumps long awaited tax returns noting the $750 he paid in taxes and revealing the large amount of loans due in the next few years.
The stories revealed Trump isn’t the wealthy person he possessed nor the smartest businessman.
However, with the exception of questionable business expenses he reported, Trumps tax lawyers probably legally used every tax loophole to prepare his taxes.
You see, the tax code is prepared for the wealthy. Laws are written by attorneys in Congress and you can bet they look out for their own.
Rich Americans and a small army of sophisticated advisers have perfected the art of tax avoidance: wealthy families set up complex trusts, private pensions, and life insurance schemes to lower their taxes. Silicon Valley startups values in the billions of dollars from tax breaks meant for small businesses. Multinational corporations shifts profits to overseas tax havens. Add it up and, according to one estimate, billionaires now pay lower overall tax rates than working-class Americans hovering above the poverty line.
Congress has helped, by failing to fill obvious loopholes and opening new ones. Lawmakers have also starved the IRS that polices the rules. From 2010 to 2019, the number of IRS revenue agents dropped, from 13,879 to 8,526 even as the economy they must patrol kept growing in size and sophistication.
IRS agents can’t spend time fighting guys like Trump, because with their army of tax attorneys they keep agents tied up with appeals, so they focus on the little guy who can’t afford legal help and is glad to pay additional tax to avoid jail time.
In May a government watchdog, the Treasury Inspector General for Tax Administration, four 879,415 high-income Americans didn’t file returns from 2014-2016. The agency then barely tried to collect, with 326,579 cases never entered into its enforcement system, and 42,601 cases closed without any work done. Overall, the IRS’s audit rate has plunged to barely above zero.
Of all income groups, Americans earning $10 million or more have the lowest chance of facing an IRS examination.
Joe Biden has promised to push in the opposite direction. He’s proposed higher rates on corporations and rich individuals earing $400,000 or more, limiting deductions for high earners, and almost doubling the wealthy’s rate on capital gains and dividends so it marches rates on ordinary income.
Frank Calio's Blog (www.frankcalio.com) 