Skip to content

This bombshell is a dud.

October 3, 2016

The breathless non-newsworthy headline theme of the next few days will be some version of  “Trump did not pay taxes for almost two decades”

BFD. This is another “Bobby did it too” moment.

Instead of having to talk about her family foundation or her mishandling of government email, or providing transcripts of her Goldman-Sachs speeches, Mrs. Clinton would like to talk about Mr. Trump’s taxes.

Understandable.

The crux of the story is that Mr. Trump legally reported a  very large net operating loss (NOL) on his 1995 taxes, and per IRS regulations claimed a portion of that loss against income generated in other tax years. According to “tax experts” reportedly consulted by the New York Times, there was no “…suggestion of wrongdoing” in the filings.

Sorry Hillary. Taking a loss is perfectly legal and is a tax strategy available to both businesses and individuals, although the rules vary for each. You should know…you do it too, to the tune of nearly $700K in 2015.

The difference is that the Clinton’s income was too high for the loss to result in a loss carryforward. Still, the loss helped them to get about one million dollars of the estimated taxes they had paid back as a refund in 2015.

Most of us don’t think in terms of offsetting income, so it’s easy to take the headlines at face value.

Without getting too deep into the 74,608-page Federal tax code, here’s how it works, in a very tiny nutshell.

Losses that exceed income in a given year can be carried backwards  two years and forward for up to 20 years for businesses, and may be used to offset operating profits, i.e. business income.

This isn’t just a rule for the rich either.

Ordinary taxpayers can claim personal losses that can also generate carryback or carryforward adjustments. For instance, if you live in one of the 20 Louisiana parishes designated as Federal disaster zones due to the flooding this year, and have unreimbursed losses, you can carry those losses back to 2015, which essentially could provide a new or larger refund of your 2015 taxes.

Somewhere buried in some dank moldy corner of the federal record archive there is probably a statistic showing how many business owners have claimed a loss carryforward (or carryback) over the past 20 years.  As the normal human lifespan in the United States is only about 78.8 years, it isn’t feasible to look that up that statistic.

Suffice it to say, it’s a bunch.

Do you really believe that any of those taxpayers called the IRS and said “Hey, I want to pay as much income tax as possible, so I won’t be claiming my losses this year?”

Donald Trump has plenty of legitimate problems with his campaign. This isn’t one of them.

If using the Federal tax code to pay as few taxes as possible is proof of moral turpitude, then every taxpayer out there that claimed a dependent exemption, EITC, excess medical bills or yes, an unreimbursed business loss is also a sinner.

At this point in the election cycle, your hopes of hearing anything substantive from either side are not just slim, but nonexistent. From now on it’s mostly just say whatever suits the moment and if the facts don’t support it, oh well.

There is already audio indicating that Mrs. Clinton knows that free college isn’t feasible, and acknowledging that many of the youngest voters just don’t have a grasp on how the world really works.

The problem with this election for Trump is that even when he wins, he loses.

If Mr. Trump makes a lot of money then he is a greedy capitalist pig and if he loses a lot of money then he’s a lousy businessman.

Whether Trump should have gotten out of the casino business sooner is moot now.  Apparently, it wasn’t much of a winner for any owner, as witnessed by the death spiral of the legendary Las Vegas gambling venue  Caesars Palace and similar Atlantic City businesses, many owned by prestigious private equity firms not involved with Mr. Trump.

So what’s a voter to do?

One thing you might watch for is which candidate has gained the most from playing “look over there.”

As an acknowledged grandmaster of the political shell game,  it would seem that in Mrs. Clinton we at last have a hands-down winner…in the pooper-scooper division.

From → op-ed

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: