I think everyone should write their congressman and tell him or her that you are paying the
Last edited Sun Oct 2, 2016, 06:05 PM - Edit history (1)
Trump effective tax rate until they appeal this provision in the tax code that allows billionnaires like Trump to effectively pay NO FEDERAL TAXES. The system is rigged that allows a billionnaire to deduct losses for up to a period of 18 years and recoup those losses against other sources of income which would otherwise have been taxable. FTR, I know what Trump has done is technically legal since I am an Accountant, but that doesn't make it right or fair to the rest of us who are picking up his tab when he doesn't pay. Those losses he suffered in many cases could be partially what we call "paper losses" not necessarily real losses. One type of such loss would be Depreciation.
For those of you who don't know what that is, Depreciation is a method of recouping your initial cost of an asset over time. So for example is Trump bought a Hotel/casino and paid $100 Million for it, he could write off that cost of the building over a period of lets say 20 years. That would be $5 Million a year. Well most real estate property actually appreciates in value, meaning it goes up in value each year not down. So in the early years when the casinos were making money, the casino's value would have been going up not down because Ocean front property is a scarce commodity and hopefully, the gods are not making any more of it. Trump would have been writing off the purchase cost each year, and back in the 80's they even had accelerated depreciation rates which allowed businesses to write off depreciation much faster than they do now. My point is that he was writing off expenses that he had incurred on paper only before he even incurred any actual loss.
Also included in those write offs is some intangible assets like something we called Goodwill, which is another non-cash expense. Intangible assets are those assets you can't see or touch but are unique because of the value that society assigns it. This is similar to what Trump calls his Brand. So for instance, you have two identical houses sitting side by side, and one belong to Elton John lets say, and one belonged to a John Q Citizen named Mike Jones. Two identical houses, and Elton John sells his house minus the furnishings and moves away. He might be able to obtain a selling price of $100M for his house. Mike Jones immediately sells his house which is identical to the one next door. He will not receive the same $100M for his house because part of that sales price is that value related to Elton John having once lived there even though the houses themselves are identical. The same goes for Trump. Trump likes to claim that his Brand makes anything attached to his name more valuable. So I'm willing to bet, the value of his casino was increased on Trumps books beyond what he paid for the casinos originally, because of his perception that his Brand has a value attached to it. While Trump was writing off that depreciation of the casino building, he would have also been writing off or "Amortizing" the value of the Trump Brand as an additional expense. So I'm not convinced that the $916M business loss that Trump wrote off was ALL Business. Like much of what Trump says, it exists in his head only.
We all know that Trump is prone to exaggeration particularly when it comes to his net worth. Also, in spite of what he says, Trump is not an Accountant and I doubt that he knows more about the Tax Code than most. If he did, he'd be doing his own taxes. My guess is that his accountants do his tax returns and he inflates whatever values that they come up with because that is what he does. According to him, everything that he touches is HUUUGGGEEE. I just hope that those IRS auditors are going over everything in his return, each and every year, because we all know that he is prone to lying, BIGLY.
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dispel that "bad businessman" impression he'll have to explain that it's all paper, which ends up proving the point that he's making money that he's not paying a fair share of taxes on. Which, as you point out, is legal and ought to be modified. Except he's not going to advocate for that... because more tax breaks for the wealthy are needed.
