I’m not a tax preparer anymore. After seeing that my hard-working, middle class clients owed more money than ever to the IRS after Trump’s “tax cuts,” I just couldn’t do it anymore. I sold my business of thirty years to a local CPA firm and prepared to take my life in a completely different direction.
So of course, here I am, almost a year later, talking about taxes again. If you haven’t read The New York Times report on the Trump tax data they’ve obtained, you should.
In March of 2019 I tweeted a thread about what we could learn about Trump if he released his tax returns. Tax returns tell us things like how much the taxpayer earns, how much they pay in property tax, whether they had any large medical bills, and how charitable they are.
The New York Times only summarized the tax data they studied, so there are still many questions to be answered. It should be noted that, as in most things in TrumpWorld, there is a fine line between illegal and immoral or unethical. What the president’s tax returns show are huge losses used to offset income. The IRS is investigating whether a $72.9M refund that was claimed by and paid to Trump was legitimate. In the world of commercial real estate, there can be legitimate losses the are used to offset income in some years. The question is whether Trump’s losses were legitimate or manufactured for tax purposes.
I have had many conversations with clients about what constitutes deductible business expenses instead of non-deductible personal expenses. I once had a client insist that his dog’s food and vet bills were deductible business expenses because the dog protected his home office. (Since I have three big dogs, I would love for that to be true, but it’s not).
Trump seems to take that kind of logic to the extreme. Performers can deduct personal care expenses if their job requires them to look a certain way that is different than they would normally appear. It’s the same logic that says uniforms are tax deductible, but if you wear normal jeans and a shirt to work, that is not a deductible expense. It is hard to imagine anyone having $70,000 in hair stylist expenses that only relate to their job.
The president has also taken deductions for items most people would consider personal expenses like costs related to his residences, including property taxes. The property tax deductions are especially significant because the 2017 tax bill limited the amount that taxpayers could deduct for all state tax expenses to $10,000. This meant that most homeowners in highly taxed states like California or New York weren’t able to deduct any property tax expenses.
Another interesting revelation is that Trump has written off consulting fees of almost $26 million. His daughter Ivanka, who was a salaried employee of the Trump Organization, appears to have received at least some of these fees. In theory, the consultant reports those payments as income on their annual income tax returns. Unless we see Ivanka’s tax returns, we won’t be able to tell if she reported these payments correctly.
When I’m reviewing a candidate’s tax return, I always look at their charitable donations. Knowing how much a candidate donates to charity gives me an indication of their values and how much concern they have for others. What The New York Times story shows is that when a community neighboring a large estate Trump owned wouldn’t let him develop it into a golf course and private homes, the president signed a a deal with a land conservancy in which he agreed not to develop most of the property. This allowed him to claim a charitable tax deduction. Trump’s tax records show that he has used this strategy to claim charitable tax deductions for not developing property he owns four times over the years. It is apparent that the president considers charitable donations only in terms of how they can help him in some way. A different but comparable circumstance is the way that he lied about the pandemic, because telling the truth could be harmful to his run for reelection. Are these really the values we want in a president?
Hopefully the New York Times will release the tax return data they used to write these articles soon. It’s important information that should be available to every voter. Until they do, I’m going to return to not being a tax preparer.
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