Why No Criticism of GM, Chrysler, and the UAW? They Got a Much Sweeter Tax Loss Deal from the Democrats.
A Saturday story in the New York Times alleges that Republican Presidential nominee Donald J. Trump may have avoided paying income taxes for 18 years due to a $ 915 million net operating loss declared on his 1995 federal tax return. A net operating loss is a form of tax loss carry forward which can be used by a taxpayer to offset future (and sometimes past) income taxes due the federal government. The authors claim that someone anonymously mailed them pages from Trump’s 1995 return. A felony violation of federal law which the New York Times only participates in when its enemies are the victims. Given recent history, it is far more likely that some snake in Obama’s IRS mailed the pages to the New York Times. One more reason to impeach IRS Commissioner John Koskinen.
None of this is news. Trump admitted to the size of his 1990’s loss in his book Art of the Comeback. More interestingly, he explains how the Tax Reform Act of 1986 (TRA 1986) crushed the real estate market in New York and created his massive loss. Note that he mistakenly attributes his predicament to TEFRA, a 1982 act which also caused him some problems, but it was actually TRA 1986 which he is referring to.
Tax loss carry forwards date back to at least 1954 in the U.S. tax code. The logic behind them is simple: if the government benefits from an entity’s income, it should share that same entity’s misfortune when it runs losses. Both moral and ethical, two concepts not usually associated with the U.S. tax code. The salacious case being made against Trump has no merit, except as propaganda. Remember, Trump had to lose $ 915 million on long term assets to get the tax loss carry forward. More importantly, Trump’s massive loss was created by a sea change in the rules of the game dictated by the same federal government.