The decision made by Democrats on the House Ways and Means Committee to release former President Donald Trump’s tax returns was absolutely in the best interests of Americans, even if their motivations were wrong.
We are cynical that now the committee will suddenly use Trump’s taxes as a rallying call for reform to a broken tax system that likely benefits them as well.
Already, the members of the committee are framing the narrative as though this is a Trump problem and not a tax policy problem that has existed for decades.
“Trump acted as though he had something to hide, a pattern consistent with the recent conviction of his family business for criminal tax fraud,” Rep. Don Beyer, D-Va., a Ways and Means Committee member, said in a news release. “As the public will now be able to see, Trump used questionable or poorly substantiated deductions and a number of other tax avoidance schemes as justification to pay little or no federal income tax in several of the years examined.”
In fact, it is not exclusively a Trump problem. The rot runs deep, and it is codified in a system that has become an unenforceable (dis)honor system for many of the wealthiest Americans.
Gov. Jared Polis’ leaked tax documents showed he was able to use the overly generous and extremely poorly thought out business loss deduction loophole to avoid taxes for years after he lost money in business dealings. Polis showed us his mettle when he turned around and advocated for reforms to the law so that only a portion of business losses could be deducted and capping how many years forward a loss could be carried.
Sen. Michael Bennet blamed the investors managing his accounts for investments that shorted loans to the Puerto Rican government and profited off of the default on those loans. The Daily Beast reported that Bennet has millions in off-shore accounts that are notorious tax havens.
We hope the Trump tax revelations – similar to the tax returns leaked and published by ProPublica over the past couple of years – will motivate voters to make tax reform for the very wealthy a top priority. If releasing Trump’s tax documents leads to a Republican vendetta to release other tax returns of wealthy members of Congress, the White House or even federal courts, then let the light shine on our inequitable taxes. Change will never come without transparency, even if transparency must come in the form of a petty tit-for-tat.
Americans should be outraged that as the middle class toiled for decades under an unavoidable tax burden of 10% to 20% of our adjusted gross income, men and women at the upper ends of the income strata were able to evade and avoid their fair share by deploying all kinds of shelters and questionable tactics.
To Trump’s credit, the 2017 Tax Cuts and Jobs Act did make the tax system more equitable, doubling the standard deduction in a recognition that middle-class folks couldn’t abuse itemized deductions to the same offsetting tax effect as rich Americans. But the tax bill also doled out substantial cuts for the wealthy, perhaps making the equalizing effect of the standard deduction and the increased child tax credit deleterious.
According to The New York Times analysis of the documents released, “Trump reported nearly $16 million in business losses in 2020, which swamped his other income and left him with no federal income tax liability.”
The losses were so great that he will be able to carry some of it forward to avoid taxes in future years. Some carry forward may be reasonable but consider that there is no limit to how long someone could carry such losses. Every American suffers financial losses from bad investments, but if an American loses his or her job and suffers a drastic reduction in income for a single year, he or she is not able to average out their income over several years to reduce their tax burden in other years. It’s just not how the system works for ordinary people, and that is not how the system should work for the rich.
We are disappointed that the committee did not release more documents with the tax returns, including notes from IRS audits which they had previously said they would release.
The bitter divide in Washington could end up bringing Americans closer together as we prioritize putting people in office who are willing to vote against their own personal interests to implement a tax policy that requires everyone to pay their fair share without exception, exemption, privilege or priority.
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