Something we’ve not seen mentioned as yet. Something important. The tax system does, always, get you in the end. It’s not in fact possible to swan off into the sunset without ever paying anything. Not alive at least.
That losses are offset against profits is something we’ve pointed out already. Any and every tax system that even allows private enterprise is going to allow that.
But there’s another point here. There wasn’t space to mention it but it derives from this:
As to whether Trump is actually rich or not, tax returns won’t tell anyone that. While loans against assets are discussed, by the very nature of the documents, the value of the assets won’t be. Wealth is assets minus debts, something that just cannot be calculated with what’s in tax returns.
We can, if we wish, point out that The Donald hasn’t been making anything, that the Orange Man is a bad business man. OK, if we like. But the corollary of that is that he’s not made any money that he should, righteously, be paying taxes upon. Belief in the first part precludes shouting about the size of the tax bill.
But perhaps he is actually good in business. His business being to build wealth in the form of property, rather than income? For what we don’t get told is how much those golf courses and hotels are worth. We get to see the losses made. The debts assigned to them. But not the value. So we don’t know what that residual, Trump’s wealth, is.
Let’s assume it’s nothing, that net number. OK, go back two paragraphs and how much tax should someone with no wealth be paying? Or, alternatively, it’s a nice great big fat, bigly, number. So, how much tax should a wealthy man be paying on his wealth?
Nothing, as we don’t charge tax to wealth. We do charge it on the crystallisation of wealth, upon transactions. Capital gains etc. Yes there are rollover provisions for real estate and so on but cashing out and moving on causes tax to be due.
That is, if Trump has made lots of money all that is true is that the tax system hasn’t got him yet. And that tax system, barring death (American tax law can be weird on that what with step up basis and all that) which makes it a bit difficult to actually tax Trump himself, does eventually gain its pound or seven of flesh.
Which means that all of this tax debate collapses down to – either Trump’s got no money in which the complaint is what? Or, he’s got it all stashed in wealth, not income, which gets taxed later. And?