The latest pseudo-scandal over President Trump’s taxes is that he apparently took more losses than almost anyone in the country three decades ago — and by doing so, escaped the Internal Revenue Service’s clutches.
“Year after year,” a team of New York Times reporters breathlessly declared, “Mr. Trump appears to have lost more money than nearly any other individual American taxpayer.” The Times discovered this after the paper “compared his results with detailed information the IRS compiles on an annual sampling of high-income earners.”
But anyone who was around the New York business scene in the 1980s and ’90s remembers that Trump was a business disaster in those years. He admitted as much on “The Apprentice.”
And those losses meant he didn’t pay much in taxes. Back in September 2016, Trump’s Democratic rival, Hillary Clinton, and others thought this kind of thing might sink his unlikely candidacy. In their first debate, she went after him: Casino applications, she said, “showed he didn’t pay any federal income tax.” Trump immediately shot back: “That makes me smart.”
At the time, Aaron Blake of The Washington Post remarked: “Clinton almost seems to be baiting Trump into talking about how little tax he’s paid, and he nibbles at it here.” His willingness to take the bait, Blake averred, was “not a great idea.”
Well, he made it to the White House anyway, so it’s far from clear it was a bad idea.
I’m not talking here about what is meet and proper to expect from a presidential candidate and a president. Trump has transgressed so many boundaries, chipped away at so many norms and conducted himself in so unbefitting a manner that he continues to suffer from historically low approval ratings. This, despite the country’s extraordinarily good economic circumstances.
He continues to pay a significant political price for his misbehavior, one that might yet deny him re-election.
But Trump was onto something the blundering Hillary Clinton and the myopic Aaron Blake missed entirely. When Trump said the fact that he paid no taxes “makes me smart,” he was again speaking a vulgar truth out loud. What else can be said of someone who loses colossal sums and still manages to remain very rich?
It would appear that, time and again, Trump found the soft underbelly of the tax code and burrowed himself into it. You can call that many things. You can call it unscrupulous, or greedy, or nervy, or even sleazy. You can say it isn’t fair, if you could define “fair.”
But you can’t call it dumb.
Trump was just adopting the more extreme version of the Heinker method. According to Philip Heinker, all the way back in 1961, if you made $100,000 a year, you would ordinarily pay nearly $90,000 in taxes.
But under the Heinker method, you would pay a dollar forty. Heinker himself took the nation of Romania as a deduction, because he sent them socks and cottage cheese.
In case you couldn’t tell, there is and was no Philip Heinker. He was a character created by Carl Reiner and Mel Brooks in the early 1960s. The truth behind the joke of the Heinker method is that the field of tax law exists to provide wealthy people a way to pay the least amount the law will allow.
It may be a scandal and a travesty. But it isn’t Trump’s fault that the means existed for him to pay far less in taxes than the chattering classes think he should have. And it would be stupid of someone like Trump not to minimize his tax burden if he is able to do so.
Over the past few years, The New York Times has published tens of thousands of words about Trump’s taxes and spent years of investigative time hunting them down and digging them up. And here’s the most salient sentence it has ever published in all that time: He used “methods tax experts described to The Times as improper or possibly illegal.”
Possibly illegal. That’s because, as the Times acknowledges a few sentences later, “The line between legal tax avoidance and illegal tax evasion is often murky.”
It’s murky because the law is imprecise. You know what would be precise? A flat tax. The Trump example is the best argument for a system without deductions and shelters and the like. The Trumps of the world would pay a fairer share of a simple, 15 or 20 percent impost across the board.
Now let’s see the Democrats in the House enact it. And let’s see The New York Times editorial page support it.
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