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Mon Sep 28, 2020, 07:46 PM

The Picture of a Broken Tax System

Donald Trumpís tax returns illustrate the profound inequities of the tax code and the shambolic state of federal enforcement.

In the years before he became president, Donald Trump lived lavishly while paying little in federal income taxes. The Times reported on Sunday that Mr. Trump paid no taxes in 10 of the 15 years immediately preceding his run for the White House. In each of the following two years, 2016 and 2017, he paid the token sum of $750.

Remove Mr. Trumpís current job from the picture, and what remains is a story that still demands attention. The portrait of a man who earned hundreds of millions of dollars, lived a life of comic excess and yet, in many years, paid nothing in federal income taxes is an indictment of the federal income tax system. It illustrates the profound inequities of the tax code and the shambolic state of enforcement.

The government has sharply reduced the share of income that it collects in taxes from the wealthiest Americans. One recent study found that the 400 wealthiest households paid 70 percent of their total income in federal, state and local taxes in 1950, 47 percent in 1980 and 23 percent in 2018. The cuts in tax rates have come mostly at the federal level.

The government allows income to be sheltered from taxation for hundreds of different reasons, but real estate investors have long enjoyed a particularly sweet set of loopholes. A homeowner can write off the interest payments on a mortgage loan, but the owners of commercial buildings get a host of other benefits, too. Itís relatively easy for real estate investors to use past losses to offset income, to defer income and to avoid reporting some kinds of income. Best of all, the law lets investors claim a building is depreciating in value ó a theoretical loss of money ó even as the actual value increases.

https://www.nytimes.com/2020/09/28/opinion/trump-tax-code.html

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