By: Devin Fussa
On September 23, a portion of Donald Trump’s 1995 income tax returns were revealed. Long sought by the general public, the records were finally put on display with the anonymous sending of three pages to the New York Times office days later. It has since been revealed that Trump declared a $916 million loss in 1995 to the federal government. Such a loss would have been able to cancel an equivalent amount in taxable income over the next 18 years, at the value of nearly $50 million per year over that time span. The federal government has laws in place to prevent the average entrepreneur and realtor from struggling economically. After taking heavy losses, the government allows tax breaks to help businesses continue forward after a large annual loss. Larger businesses, however, can use these laws to save money on taxes, having the sufficient capital to report such losses ($916 million, in this case) without devastation. That business can then take advantage of a decreased tax burden in the coming years, eventually rebuilding the company. Without having access to the full documentation of his tax returns, it is entirely possible such a scenario existed for nearly two decades.
Trump and many of his supporters view this evasion as a positive action, having been able to use the legal aspect of taxes to a personal advantage. “I have legally used the tax laws to my benefit … Honestly, I have brilliantly used those laws,” said Trump. His tax avoidance over the previous years has also been applauded by other prominent politicians, such as Rudolph W. Giuliani and Governor Chris Christie. His dealings with the federal government in relation to the paying of taxes was perfectly legal, albeit ethically questionable.
“Fiduciary” duties, paying minimal tax, do not always benefit American society. Taxes often contribute to basic societal needs, such a military, public education, and infrastructure. The civic responsibility to pay taxes have been ignored by Mr. Trump, through his use of loopholes in the tax system. Donald Trump has done nothing illegal with regards to his tax situation, but many would argue the moral and ethical value of such decisions. His reluctance to provide such information suggests an assumption that the American public could disapprove of his business dealings.
In using the tax laws to his advantage, Donald Trump has saved himself money through legal means, something only possible for a small percentage of the American population. The problem with Trump’s taxes is not only Trump himself, but the loopholes within federal laws to manipulate one’s own taxable income. While this situation is available to only a select number, few actually manage their taxes in a similar fashion to Mr. Trump. That being said, the supremely wealthy have no legal reason to halt their avoidance of taxes, Trump included. Large corporations, as well, take advantage of the tax system. Apple, Nike, and others each hold offshore subsidiaries to minimize the amount of yearly taxes received by their individual companies. The evasion of tax by the wealthiest of Americans is an old tradition, having only recently received such attention due to Mr. Trump’s presidential candidacy.
The revelation of Trump’s taxes has created a slew of new questions without producing firm answers: we are still unsure of Trump’s complete tax records and the structure of the American tax system has been called into question, with specific regards to the top percent of society. This issue has shed light on the workings of the American tax system, demonstrating the ways in which laws meant for small businesses can also be misused by larger businesses for an unexpected advantage. It is difficult to directly fault Trump for saving money, but society is now left to judge whether his taking advantage of loopholes was acceptable.