Trump Taxes: Topline Findings
The President is deeply leveraged with no escape in sight.
The New York Times is flooding the zone with articles from its investigation into Donald Trump’s tax records. David Leonhardt provides some highlights.
- Mr. Trump paid no federal income taxes in 11 of 18 years that The Times examined. In 2017, after he became president, his tax bill was only $750.
- He has reduced his tax bill with questionable measures, including a $72.9 million tax refund that is the subject of an audit by the Internal Revenue Service.
- Many of his signature businesses, including his golf courses, report losing large amounts of money — losses that have helped him to lower his taxes.
This adds more evidence but basically just confirms what we already knew.
- The financial pressure on him is increasing as hundreds of millions of dollars in loans he personally guaranteed are soon coming due.
That, at least, is new news to me and important: How does that pay that off? What pressures is that putting on his decisionmaking in office?
- Even while declaring losses, he has managed to enjoy a lavish lifestyle by taking tax deductions on what most people would consider personal expenses, including residences, aircraft and $70,000 in hairstyling for television.
While this may infuriate his base—which would be a happy outcome for me—it’s arguably not particularly problematic. A lot of things that are “personal expenses” for normal people are “business expenses” for celebrities. (Indeed, there was a great Al Franken bit on Saturday Night Live about this some forty years ago.)
- Ivanka Trump, while working as an employee of the Trump Organization, appears to have received “consulting fees” that also helped reduce the family’s tax bill.
This strikes me as fishy but may well be “legitimate.” The tax code is rife with loopholes that can be exploited.
- As president, he has received more money from foreign sources and U.S. interest groups than previously known. The records do not reveal any previously unreported connections to Russia.
Again, this is a red flag. Honestly, I wish the early reporting were focusing on this issue rather than the titillating and sensational.
In terms of the public policy angle, Leonhardt points out several other things:
Mr. Trump may be the wealthiest U.S. president in history. Yet he has often paid less in taxes than other recent presidents. Barack Obama and George W. Bush each regularly paid more than $100,000 a year — and sometimes much more — in federal income taxes while in office.
Amortizing business losses and inflating business expenses may well be perfectly legal. Or they may simply be exploiting the fact that the IRS has been deliberately understaffed in a way that gives a huge advantage to tax scofflaws who can hire armies of high-powered lawyers. But the optics ain’t great.
This speculation mirrors my longstanding suspicion:
His 2016 presidential campaign may have been partly an attempt to resuscitate his brand.
The financial records do not answer this question definitively. But the timing is consistent: Mr. Trump announced a campaign that seemed a long shot to win, but was almost certain to bring him newfound attention, at the same time that his businesses were in need of a new approach.
He wouldn’t be the first, of course. Indeed, almost every presidential campaign is a vanity exercise and one in brand enhancement. Almost none of the Democrats who ran for the nomination this cycle had any chance at winning. Ditto all but a handful of Trump’s 2016 opponents. Trump is simply unique in that he’s gotten rich* off of being Donald Trump.
Another key bit:
The presidency has helped his business.
Since he became a leading presidential candidate, he has received large amounts of money from lobbyists, politicians and foreign officials who pay to stay at his properties or join his clubs. The Times investigation puts precise numbers on this spending for the first time.
A surge of new members at the Mar-a-Lago club in Florida gave him an additional $5 million a year from the business since 2015. The Billy Graham Evangelistic Association paid at least $397,602 in 2017 to the Washington hotel, where it held at least one event during its World Summit in Defense of Persecuted Christians.
In his first two years in the White House, Mr. Trump received millions of dollars from projects in foreign countries, including $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
I have been shouting from the rooftops since at least November 2016 that this was going to be the biggest scandal of his presidency. As big as the Russian interference and attempts to coerce Ukraine’s government into damaging Joe Biden were, the day in, day out corruption and self-dealing always struck me as the real story.
But, again, it’s still not enough:
But the presidency has not resolved his core financial problem: Many of his businesses continue to lose money.
With “The Apprentice” revenue declining, Mr. Trump has absorbed the losses partly through one-time financial moves that may not be available to him again.
In 2012, he took out a $100 million mortgage on the commercial space in Trump Tower. He has also sold hundreds of millions worth of stock and bonds. But his financial records indicate that he may have as little as $873,000 left to sell.
He will soon face several major bills that could put further pressure on his finances.
He appears to have paid off none of the principal of the Trump Tower mortgage, and the full $100 million comes due in 2022. And if he loses his dispute with the I.R.S. over the 2010 refund, he could owe the government more than $100 million (including interest on the original amount).
He is personally on the hook for some of these bills.
In the 1990s, Mr. Trump nearly ruined himself by personally guaranteeing hundreds of millions of dollars in loans, and he has since said that he regretted doing so. But he has taken the same step again, his tax records show. He appears to be responsible for loans totaling $421 million, most of which is coming due within four years.
Should he win re-election, his lenders could be placed in the unprecedented position of weighing whether to foreclose on a sitting president. Whether he wins or loses, he will probably need to find new ways to use his brand — and his popularity among tens of millions of Americans — to make money.
None of that is per se illegal or unethical. It’s hardly unprecedented for a businessman to leverage himself to the hilt in a desperate gambit to save the enterprise. But it’s a hell of a position for a sitting President of the United States—with the ability to grant or withhold lots of favors—to be in.
__________________
*While one take from the tax reporting is that he’s not nearly as rich as he claims, he has nonetheless managed to live the lifestyle of the rich and famous for forty-plus years. That’s more than most of us can say.
This is the gargantuan elephant in the room. His creditors own him. Who are they? What influence do they have?
And most importantly, what are the national security implications? A lavish, debt-financed lifestyle is a massive red flag for anyone trying to get a government security clearance. What will Trump be prepared to do when those bills start rolling in?
How much do you want to see Trump living in a small condo in Florida, heavily guarded by Secret Service, with his presidential pension being garnished to pay off these debts. If you could guarantee this, I would choose it over jail.
@BugManDan: If it’s a 3rd floor walk-up I’m down with that.
I wouldn’t want to say that.
@BugManDan: I’m good with that if it’s in Camp Marianna.
In terms those on the right will understand:
You’ve all fallen for a less competent James Taggart looting his own companies, and you’re helping him do it.
@OzarkHillbilly:
Another thing that most of us can’t say is that we started out rich and turned our families fortune into a pile of debt.
Or that we have been responsible for a large percent of 200,000 American deaths
I guess if I had been willing to finance “the lifestyle of the rich and famous” on the backs of millions of actually hard-working Americans, I might have been able to say that too.
That’s another major point of this report: the American taxpayer has been subsidizing Trump’s lavish lifestyle for years. And he has enjoyed all the benefits of American public life–military protection, police protection, infrastructure–and using them to benefit himself while paying nothing.
I’m waiting for the Intelligence committees to subpoena Trumps taxes for the purpose of determining who he owes money to.
Vlad: Donny baby, I have a proposal for you
Trump: What’s that?
Vlad: You know that $400M you owe, well it will all be forgiven, if…
Trump: If what?
Vlad: we have a favor…
This is a national security concern.
This statement alone, Mikey, doesn’t really tell you much about how leveraged Trump is. If he truly is a multi-billionaire (I reserve judgment), this may not be a very high percentage of his income and may be subject to refinance in any event. Similarly, if the $100 million tax debt comes due, you can’t tell from what we have so far if that is some kind of mortal blow.
My immediate take on the parts of today’s reporting that I have read is that Trump is a money churner. He has astronomical losses and then uses the Net Operating Losses (the “NOLs”) to avoid taxes on actual gains for years to come and then generates another basket of NOLs, both real and imagined (by creative accounting). What he does not do is add value to the economy. He is just a sponge on the cost of transactions.
Reading through these docs is exhausting. He’s using a byzantine method of self-dealing and family dealing to flatten his burden and delay paying anyone off. This guy starts a business so that he can write off wiping dog shit off his shoe, then he’ll borrow money so he can pay someone else to do it instead.
It’s a huge liability, and he managed to push off detailed scrutiny for years. Now that it’s all in the open, it’s his biggest reason for needing to hold the White House at any cost.
Key question to be pondered by the next Congress: If an incompetent buffoon can get away with this much chicanery and tax dodging, what are the Bezos, Gates, Musks, and other real billionaires of the world getting away with?
@Joe:
“We used to build shit in this country. Now we just stick our hand in the next guy’s pocket.”
-Frank Sabotka, The Wire
Quite frankly, your last assertion is largely true of a lot of wealth generation in the American economy. But it’s only part of the equation, because the next question is whether compensation matches the addition to the economy.
I read an essay on Aeon about why taxation isn’t theft. The major argument the author made was that taxation is only theft if the market actually allocates income based on merit.
The most dangerous jobs in America.
In finance, interest rates are determined by risk. The labor market clearly doesn’t pay based on personal risk. Moreover, many highly paid jobs are paper pushers. From what I’ve read about Trump, he doesn’t even do that. He puts in face time, cojoles, threatens, and files lawsuits.
—
Not to start this conversation here, but I can’t help but notice a profession absent from this list: law enforcement.
@Joe:
Alone, no. In the context of the rest of the reporting, it says a lot, and none of it has positive implications for America’s national security.
@Kathy: Too many people are assuming some rocket-science level of financial legerdemain is required here. Much more likely that it’s simple Large Business Financing 101 stuff. I worked for years in an industry where the usual metric was EBIDA (earnings before interest, depreciation, and amortization). Even though these earnings were large, and the interest payments fixed, the D and A paper losses were manipulated in order to reduce taxable income to zero.
Let’s all just take a moment to enjoy that statement, shall we?
@Gustopher:
It’s just an incredibly complicated issue. What counts as a legitimate “entertainment” expense for a business? It’s next to impossible to distinguish going out for a meal and some drinks with people in the same line of work for business and personal purposes. (See also: What qualifies are government business and campaign business for a sitting President?) The more complicated the business, the harder to judge even if you’re trying to be honorable about it.
For normal people, it’s more cut and dried. I can’t write off the cost of a business suit that I wear to teach in because I can wear it out to dinner. But the star of The Apprentice might well be able to do it. I can’t write off my haircuts but he may well be able to.
A lot of people who form family-based corporations for a side hustle wind up writing off a lot of things they couldn’t ordinarily. Trump is doing this on a massive scale. Much of it is clearly corrupt. But I don’t know where the lines are actually drawn.
@BugManDan: The end of Goodfellas.
“I Get To Live The Rest Of My Life Like A Schnook”
@Pylon: In this daydream of mine, Trump sits on his tiny front porch cursing to the Secret Service about the tour buses that drive by and announce over the loud speaker, “this condo on the right is the home of former-president Donald Trump”. His real complaint, though he never states it out loud, is that they don’t even stop.
See, here’s the thing that burns me up:
I know a lot of people who run businesses. My dad runs his own medical practice. And the thing is that, in the early going, running your own business is hard. I remember, as a kid, my dad going weeks without paychecks because he had to build the business. And every business owner I know has gone through that, especially early on. You stretch your personal budget as far as you can so that the business can thrive. Short term pain for long term benefit.
Trump doesn’t do this. His approach to business is to plunder as much as he can and then let the business fail. Trump steaks. Trump airline. The Taj. He pays himself lavish salaries, funds a high-priced lifestyle, hires his family members at insane salaries. And then he leaves everyone else holding the bag when the business collapses.
(If you’re seeing an analogy to how he’s running the country, award yourself a gold star).
He ran his businesses into the ground. Then the Apprentice lifted him up. Then he ran his businesses into the ground. Then he somehow won the election. And now the bill is coming due. At some point, his luck has to run out. It already did run out for the country.
@James Joyner: Should meals and entertainment be tax deductible? My first reaction is “no”. If you take a customer out because you think it is worth it, not having a tax deduction might shift that equation but shouldn’t alter it. The difficulty comes when someone travels for work and has to eat at restaurants. If this isn’t a tax deduction then reimbursing it counts as income and the employee gets taxed on it. So in some circumstances deducting Meals makes sense. But I don’t think it ever makes sense to allow a deduction for other types of entertainment.
@BugManDan::
Do we get to pick the part of town? I’ll take your deal if it’s a shitty trailer park that the government acquires the immediate area of but he can still hear all the screaming, terrible neighbors and drama with the cops coming every other day. The SS can establish a no-go zone and dig / make him a bunker for “safety” but I really, really feel Trump needs to live among his people. The MAGAts will think it glorious and fight to get a trailer nearby their God and Trump gets his own personal Hell of living with the nobodies. The praise of being their Lord and Master will wear off quickly if he has to actually deal with them….
No fancy anything, nothing gilded, no fancy parts of town with big names wanting to see his pad. Every night he goes back to his doublewide and lives life as a schnook. Publix delivery and pink plastic flamingoes as far as the eye can see. Also, during hurricane season he’s the last to be evacuated and doesn’t get to bail early if the weather turns ugly. Yes – I think I could live with that in lieu of prison should Biden insist on holding the moral high ground…..
@MarkedMan:
That’s why god invented corporate credit cards and per diems.
The bottom line findings, i.e., buried at the bottom of the supposed journalism, is that Trump pay $5.7 or so million in 2016 and 2017 with tax filing extensions then rolled the excess forward.
They are all hot and heavy on the $300 million loan, on a building worth more than that now so easily refinanced. And NY Times didn’t discuss his cash flow at all, which is how you judge an ongoing concern.
But the hit job is probably effective with the young voters. Surveys have shown that they more than earlier generations have a hatred of successful people due to their educational system conditioning and external locus of control (their belief they don’t have personal agency in their life), also due to the bad k-12 and higher ed conditioning.
@Kathy:
An excellent question. Republicans continually run on tax reform, which turns out to be upward redistribution. I really wish Dems would run on tax reform. Real, major tax reform. Might be a window to push a VAT while people are being made aware that billionaires don’t actually pay our supposedly progressive income tax.
@JKB: Never a thing he can do that you won’t excuse, is there? You’re just fine with the fact you (assuming you actually pay taxes) and every other taxpaying American has been subsidizing his profligacy for decades.
He could rape and strangle your mother in front of you and you’d still worship him, you cultist toad.
@Hal_10000:
Absent scruples, that’s a pretty sweet plan. It takes Other People’s Money to a whole new level.
@JKB:
And POTUS asking for a refinance isn’t a conflict of interest? Remember, he didn’t put things in a blind trust like others have but left it to “family” to run…. only he’s clearly been dealing himself in again based on his own words and actions. His status is extremely relevant to how this goes down aka badly for him either way.
Nobody’s giving that man a loan if he loses office – he’s a liability and ran out of people to give him money decades ago. The Trumps have stated the Russians were their sources of money and it’s a MAJOR security concern for an ex-POTUS to be getting money from Russia (what’s he selling to get it?). Nobody should be giving him a loan if he keeps his office as it’s potentially illegal AF. Who’s gonna take that risk? Trump won’t be POTUS forever and the statue of limitations wouldn’t run out in time even if he snagged another term. Unless he has that $300m+ (and he doesn’t), he is SCREWED.
@MarkedMan: I’m honestly not sure where one draws the line. Wining and dining customers is sometimes simply the norm in an industry and I don’t know where one draws the line. Conversely, those who travel for business writing off their own meals? It could well be argued that they were going to eat anyway. And, to the extent they had to eat somewhere more expensive, why isn’t the employer, vice the taxpayer, on the hook?
If I’m, say, an independent travel writer, do I get to write off the costs of lavish vacations? Only if I publish an article on it somewhere?
@James Joyner:
Only if you can prove you published an article or book about that particular travel experience. My accountant used to question me about any scenes I wrote that might have been based on real life doings: Did I fly to New York and then write about it in a published work? Did I take a road trip and write about it? If so, it was a deduction.
This applies to fiction as well as non-fiction.
@Michael Cain: I forget which financial scandal it was attached to, but in the early 2000s the joke was that EBITDA meant “Earnings Before I Tricked the Dumb Accountant”.
@KM:
It’s not like he owns shares that can be put in a trust and sold or bought by someone else. It’s more than 500 interlocking LLCs in various jurisdictions. In some cases his contribution to the LLC was in kind: permission to say that Donald Trump is involved in this deal. In others there are loans that have been personally guaranteed by Trump. In some the assets owned are highly illiquid so dissolving the LLC quickly would involve taking a big loss. I have seen estimates that it will take a decade to unwind things gracefully when he dies and leaves the rats’ nest to his kids.
@Kathy: You really think that many on the right have actually READ Atlas Shrugged? I would guess that most of them only know what they’ve been told about the book. They might not know who James Taggart is. Maybe some of them watched the movies, but even that is probably a stretch, and James didn’t play a big role.
@Michael Cain :
And?
This was a known issue from the start. Nobody made him run for POTUS; that was his choice. The Office comes with a huge host of ethical and legal complications somebody like Trump should have been kept the hell away from *specially* because of the massive shell game you cited. A GOP with balls would have told him back in 2015 to sell it all at a loss or walk on. There’s still a good chance they might have won with a different candidate and gotten all the goodies they have under him and more but without the burden of MAGA insanity for decades to come.
Like everyone else, the GOP thought they were different and associating with Trump wouldn’t screw them. Trump was well known for being terrible with money then. He’s famous for being a con artist and faux nouveau riche. They should have told him the sacrifice for being POTUS is all your $$$ troubles need to be resolved first – he would have backed off in a heartbeat. Lay down with dogs and you get fleas. Watch all the dirt that comes out after he runs and how many Republicans start personally losing everything because they decided to sleep with crazy.
This. Was. All. Avoidable.
He’s not getting that loan. No bank’s gonna touch him that won’t earn him a jail sentence. He may try to sell some secrets to get cash but that’s not gonna save his hide. I repeat, he’s SCREWED because he can’t shuffle the cards anymore. Wingnut grift won’t be enough to sustain him after the federal coffers get cut off.
@James Joyner: I’m not suggesting that companies stoo wining and dining customers, just that they shouldn’t ask taxpayers to subsidize it. If it’s worth, say, $200 to take a customer out it seems unlikely to not do it because the company had to pay marginal rate on that, bringing it to say $260 (and, for most companies, much less).
We take it as such a given that someone scraping but to make ends meet should be required to subsidize cocktails for corporate sales reps that we forget this is all just a sop to the restaurant lobby and never really had a business justification.
Having read the thread through, I would ask myself if Dr. Joyner ever reads/listens to what he’s said, but I’m pretty clear that the answer is “no.” I’m starting to really wish that he had more teaching to do because on social commentary, he’s REALLY out of his depth.
@KM:
@Sleeping Dog:
And the problem is? 🙂
Actually I meant one of those concrete storage types preppers love. After all, it doesn’t have to be nuke-proof for an EX-President, merely hold off attackers until reinforcements / rescue arrive. In my head, I pictured the bunker from Simpsons Treehouse of Horror VIII – you know, the Omega Man parody I may or may not have watched recently as part of my work from home routine? I mean, do all former Presidents get bunkers
to hide infor safety sake or just the ones the pitchforks are coming for? There must be a set standard after all these years – follow that and local FL hurricane construction laws and we’re good!@CSK:
But how far does that go? Is blogging about it enough? Tweeting? What if I run ads or have a Patreon?
If I blog about something I saw on DirecTV, can I write the subscription off? Or only if I don’t also watch shows I don’t write about?
I guess that’s why we hire accountants.
@Michael Cain:
I assume it takes the ability and resources to hire, retain, and keep quite lawyers and accountants who can cook the books and game the system. Someone leaked Trump’s returns. The leak seems very thorough, as though someone with ready access to them leaked them, say an accountant or tax lawyer…
Look, no one likes to pay taxes, and everyone can game the system a little. A small business owner will register their car to their small business rather than in their name, and deduct gas, repairs, oil, maybe even miles traveled (if applicable). that’s unavoidable, and some tricks are then triggers for audits. the rich can do it harder, better, and more thoroughly. And the more income, the more they stand to gain by evasion.
If I were in Congress, I’d ask several tycoons to share their personal income tax returns voluntarily to a subcommittee on tax reform which will keep them confidential. We’d just want to see what state of the art tax cheating is like.
@Just nutha ignint cracker:
I don’t think many on the right read at all, much less a tome so large it produces its own discernible gravitational field.
But those who read, often speak of this book.
BTW, Rand missed her calling. She should have written mysteries.
@James Joyner:
What it comes down to is whether you were paid for it by another party, who then published it, or intended to publish it. Having a contract, or a copy of any documentation of the payment you received, helps, particularly if the work hasn’t yet been published.
A personal blog is like a diary or journal. No one pays you for writing it-unless you have advertisers, which is a bit different–so it’s presumed to be something you do for your own pleasure, like skiing, hiking, or reading. This explains why so few major writers blog. Why should they do for free what they can get paid enormous sums to do?
As for self-publishing–you assume your own expenses and pay taxes on any profit you might see. I don’t know if any deductions are permitted, since I’ve never self-published. I suspect not, but again, self-publishing is not my area of expertise.
@Kathy:
Any of the big accounting firms can do it. Any number of medium-sized and up companies do it with their internal accounting staff. It’s not gaming the system; it’s applying well-known rules exactly as they are written. (Well, exactly as they have been interpreted by the courts.) Trump’s been under continuous audit for what? At least 10 years? So far they’ve found one case where they say he overstepped, and he may win that one in court.
Why are there so many loopholes? Because Congress seems to be unable to restrain itself from attempting social engineering via the tax code. Not just Congress. Every year I get a tax credit against my state income tax for a portion of my long term care insurance premiums.
@CSK:
I write off just about all my travel. I haven’t been audited, but I suspect the rules are looser in fiction. Obviously I write off book tour, but I’m done with that. (Fingers crossed.) Sicily, Luxembourg, Germany, France and Belgium were covered by the WW2 trilogy. The two adult books I wrote allowed me to write off two trips to Cyprus and two to Netherlands, but I actually designed the books with the specific purpose of justifying overseas travel. Pity those books didn’t take off – it’s a great big world out there.
But I also wrote off Vegas/Boulder City for a project I was actually working on, and ended up setting aside. Now, I’m thinking of giving the 60’s the historical fiction treatment which will mean visiting London, New York, San Francisco, maybe Austin. If we get this TV thing off the ground I’m pretty sure I’ll need to scout possible locations in countries with generous incentive programs and cheaper-than-SoCal labor. By coincidence it’d be best if it were somewhere near a nice sand beach. Spain?
For some reason I never get around to writing anything set in Mali, North Korea, or Arkansas. In fact I suspect I’ll never find reason to set a book anywhere without a selection of four or five star hotels.
@Kathy:
And I’d like to wheel out one of my periodic hobbyhorse again: the role of the City of London as one of the primary centres of global tax avoidance and “monetary recycling” services.
Perhaps not so much for American billionaires, but certainly Russian, Chinese, Arab, African etc.
And the money that flows toward politicians from these sources, as party funding donations, and in the form of lucrative “non executive directorship” positions for politicians and their families, and the linkages to the proliferating lobbying/think tank/consultancy/outsourcing networks.
@BugManDan:
Few pensions are lost to bankruptcy. OJ Simpson lives today off his NFL pension.
Dear wife and I filed Chapter 7 bankruptcy in December 2012. Our IRAs (Which weren’t worth a whole lot) and DW’s 403B were safe.
14 upvotes for absolute nonsense. What is everybody smoking today?
I did my bankruptcy pro se.
@Bill :
According to the other thread, we’re all eating too much garlic and liver 🙂
Seriously though, there’s something appealing about the concept as a thought experiment simply because it represents what Trump has spent his life avoiding: being a regular person. We’re all aware there’s a depressingly high chance he will not pay for the crimes he’s committed and the wrongs he’s done us all in the name of national unity. So a not entirely implausible alternative to jail, one that’s not really a legal punishment per se but sheer hell for him, is fascinating to consider – it might be the only justice he sees in this life if the GOP has its way.
@Michael Reynolds:
I don’t know if the rules are looser for fiction. I suspect not. All but one of my books were fiction, and the same rules seem to apply to both. The important thing was being able to prove that you wrote about the place, and that someone paid you to do so.
@JKB:
I believe the blogger you are citing got his(?) facts not quite correct either (as others pointed out below in the replies.
Here’s a better explanation:
So yes, he paid an estimate and he is allowing the government to hold that money (so he doesn’t have to continue to pay it on a quarterly basis). However, the fact remains that his liability was still just $750 for that year (and most likely similar amounts for the other years). And if he wanted he would get that $5.7 or so million or so back (minus the $750 of course).
So, yeah, when everything is said and done, he’s not paying anything in taxes.
@mattbernius:
Shorter version, everything hinges on what you mean by “paid taxes.” Yes, Trump made estimated tax payments. However, those were *vast overpayments* when compared to the $750 he ultimatly claimed he owed. So he can, when he wants, get the *vast overpayment* back.
@JohnSF: While I suppose it is rather much to expect Americans to have but the faintest grasp of geography, none of Man, Gibraltar, the Channel Isles are in London. Nor do they in particular depend on City financial centre for their operations (any more than Luxembourg or Amsterdam) for their tax schemes.
All are of course specific legal oddities in their legal regimes as left-over confettis of Empire, with Crown attachments.
Cyprus however is rather more the Russian destination.
@Lounsbury:
Well, I can’t speak to Americans grasp of geography, but mine is adequate, I’d say.
And thinking back to when I lived in London, yes, I recall that Gibraltar isn’t at the other end of the Victoria Line.
True, Cyprus is the preferred (initial) destination for Russian transactions.
But the City handles a lot (plus huge amounts of “offshore” money placed in the London property market).
The British overseas territories that are “tax havens” (primarily Anguilla, British Virgin Islands, Bermuda, Cayman Is., Turks & Caicos, Isle of Man, Jersey, Guernsey) used to be locally run. But to a large extent this is no longer the case, for the larger corporate operations.
For these the “island tax havens” are often just brass nameplates and a local agent; the funds are run out of London.
The sheer scale and volume and rate of transactions is beyond what the “islands” can handle.
This does NOT mean that all such dealings are dodgy (the real high volume stuff is corporate and “clean”).
Corporate and personal “tax efficiency” is generally perfectly legal, even if views on its ethics vary.
And even where the source funds are murky, well, those handling them may be (studiously) unaware of any issues.
But frequently the closer to dubiety the funds are, the more lucrative the fees.
More than enough to make the handlers very wealthy, and therefore able to leverage political influence.
@Michael Cain:
Full disclosure (and a very small example)… For 2019, the online free tax calculator my wife and I have used for several years had us paying $0 in federal income taxes on almost $100K in income. No trickery or even planning involved, just money falling into a couple of kinds of income in amounts that were exempt. Buys the same groceries and pays the same utility bills as money that would have been subject to taxes. Social engineering…
I’m just a middle income person, with a tax bill that’s generally about $6500. But a few things strike me:
1) I’ve been self-employed before, and I believe that if you take a business loss for 5 consecutive years, you can no longer deduct expenses. Basically, the IRS says that if you can’t make a profit after 5 years, it’s a hobby, not a business anymore.
2) I have held stocks through mutual funds, and I know that if have a capital loss, it’s deducted from your gains, and you can only deduct losses more than gains up to $3000 in a given year. The rest must be carried over for future years, and again, only deducted up to $3000 until the loss is gone.
Someone help me understand why Trump could get away with long-term business losses year after year and huge deductions for said losses.
I’m disheartened but perhaps not surprised by the ignorance. This blog has apparently been suckered into a dishonest/simple minded interpretation of a very, very complicated tax issue. I feel confident in asserting that no one know what they are talking about.
But go ahead and pontificate if it makes you feel better. Some out here recognize foolishness
@Keef: Oh, please, spare us. This isn’t particle physics here. It’s barely arithmetic. You and the rest of the Trump cult are just grasping for any way to excuse the inexcusable.
@CSK: “As for self-publishing–you assume your own expenses and pay taxes on any profit you might see. I don’t know if any deductions are permitted, since I’ve never self-published. I suspect not, but again, self-publishing is not my area of expertise.”
If you’re making money from it, sure. Although most writers I know have personal corporations they run all their expenses through, and the rules there seem to be a lot easier. You have to be making a certain minimum amount to balance out the expenses and make incorporating worthwhile, but I’ve had my corporation for thirty years now and it allows me to write off a lot…
@Keef: ” Some out here recognize foolishness”
Says the dedicated Trump voter.
@Keef: Some recognize desperation and dezinformatsia.
@Monala: “Someone help me understand why Trump could get away with long-term business losses year after year and huge deductions for said losses.”
Insofar as you seem to be extrapolating from self-employment rules, they do not apply to an ongoing business entreprise.
@OzarkHillbilly: Anybody can live a lavish lifestyle if your daddy pays you millions every year of your life, plus numerous bailouts, and you want to live in debt from loans!