Trump and federal taxes, NYT

[Rogar]

An article I was reading separated carry over losses from real estate loop holes. My rough summary was that carry over losses come from old tax law that intends to even out gains and losses over a longer period than the traditional 365 day reporting period and was fair in intent. They defined a loophole as a tax law that is so poorly written that one could avoid taxes that really should be paid. Their simple example of a loophole would be a person lives on rural land and in order to qualify for agricultural land for tax purposes he might plant a few fruit trees or graze a few head of livestock. While it might meet a grey area of legality, it's not really within the intent of the law. There obviously more tricky ways to manipulate the tax laws that may fall into a grey area of ethics. Trump apparently has not provided enough information to identify any of these.

If one is in the camp of trickle down economics, easing the tax burden on the wealthy so they can invest in business growth that will stimulate the national economy in some sort of multiple, a person could say that the act of following the law and paying as few taxes as possible is patriotic.

[LDAHL]

An article I was reading separated carry over losses from real estate loop holes. My rough summary was that carry over losses come from old tax law that intends to even out gains and losses over a longer period than the traditional 365 day reporting period and was fair in intent. They defined a loophole as a tax law that is so poorly written that one could avoid taxes that really should be paid. Their simple example of a loophole would be a person lives on rural land and in order to qualify for agricultural land for tax purposes he might plant a few fruit trees or graze a few head of livestock. While it might meet a grey area of legality, it's not really within the intent of the law. There obviously more tricky ways to manipulate the tax laws that may fall into a grey area of ethics. Trump apparently has not provided enough information to identify any of these.

If one is in the camp of trickle down economics, easing the tax burden on the wealthy so they can invest in business growth that will stimulate the national economy in some sort of multiple, a person could say that the act of following the law and paying as few taxes as possible is patriotic.

There is the black-letter law as written by legislatures and interpreted by the courts, and there are the moral/ethical/ideological shadings you may wish to assign to someone's compliance with the law. You're certainly free to ascribe motivations and "intent" in ways that define any given section of the law as an ethically indefensible "loophole". The advantage of that approach is that you will always retain finger-pointing privileges for perfectly legal activity. It's hard to conceive of any practical tax code so simple that you wouldn't be able to find some fault with "the wealthy".

[Rogar]

The advantage of that approach is that you will always retain finger-pointing privileges for perfectly legal activity. It's hard to conceive of any practical tax code so simple that you wouldn't be able to find some fault with "the wealthy".

That is true. And it is probably also true that the wealthy have a better means to find and use tax advantages. If there is fault it probably falls more to the law than the tax payer. That doesn't totally excuse the the use of loopholes from scrutiny and criticism.

[catherine]

An article I was reading separated carry over losses from real estate loop holes.

I saw an accountant on CNN who said that at the time of Trump's filing there was a real estate loophole that has since been closed where you could actually write off the loss even if it was funded by debt! So if the lender lost the money and took the hit, the debtor could (at that time) still take the write-off. So Trump may have carried over his leverage. Crazy.

[LDAHL]

That is true. And it is probably also true that the wealthy have a better means to find and use tax advantages. If there is fault it probably falls more to the law than the tax payer. That doesn't totally excuse the the use of loopholes from scrutiny and criticism.

Especially if you retain the right to define "loopholes" as any aspect of the tax code you choose to find fault with. Sometimes I think Steve Forbes had the right idea back in the day. Use the income tax to raise revenue, and leave the industrial policy, income redistribution and social engineering stuff to other tools.

[Rogar]

Especially if you retain the right to define "loopholes" as any aspect of the tax code you choose to find fault with. Sometimes I think Steve Forbes had the right idea back in the day. Use the income tax to raise revenue, and leave the industrial policy, income redistribution and social engineering stuff to other tools.

I retain the right to define a loophole as as a tax law that is so poorly written that one could avoid taxes that really should be paid. That leaves room for discussion, but isn't totally malleable.

[LDAHL]

I retain the right to define a loophole as as a tax law that is so poorly written that one could avoid taxes that really should be paid. That leaves room for discussion, but isn't totally malleable.

When you use terms like "poorly written" and "really should" it seems subjective enough for any political purposes you may have.

[Rogar]

When you use terms like "poorly written" and "really should" it seems subjective enough for any political purposes you may have.

I does define the grey area. I thought the agricultural example was a good one. Another might be what qualifies as entertainment expense that can be written off. The law says it cannot be lavish or extravagant. That is loosely enough defined (or poorly written) to allow extremes. For me, lavish entertainment is a fancy restaurant and a movie. For other circles a business conference at a golf resort might be standard. In my working days that could be referred to as a boondoggle. I'm almost certain that the courts have had to determine which side of the grey area entertainment expense falls more than once.

[LDAHL]

I does define the grey area. I thought the agricultural example was a good one. Another might be what qualifies as entertainment expense that can be written off. The law says it cannot be lavish or extravagant. That is loosely enough defined (or poorly written) to allow extremes. For me, lavish entertainment is a fancy restaurant and a movie. For other circles a business conference at a golf resort might be standard.

That's always going to be an eye-of-the-beholder thing. Is the mortgage interest deduction a loophole? The Earned Income Tax Credit? I don't disagree that the tax code can often be convoluted. A flat tax on income or assets, or some form of VAT would be relatively simple to administer and leave less room for ideological posturing. But there will probably always be disagreement on whether the rich are being adequately soaked.

[bae]

The concept of "loopholes" available only to the rich is so handy for moralizing!

The reality is a bit different. After decades of questing, with access to world-class tax advice, I have been unable to locate any *real* loopholes available to me. Everything available still ends up with taxation happening sooner, or later (in truth, with *some* exceptions that however require such contortions in one's business or personal life that they are not worthwhile.).