The DNC/NY Times released a hit piece on Trump’s tax returns yesterday. The TDS media (which was likely given a heads up on the release) grabbed the story and ran hog-wild. Bloviating gasbags bloviated. Blah, blah, blah. Yadda yadda yadda.
I don’t want to get down in the weeds about the details of the story or why it is so wrong. I just want to make some uninformed observations.
1. Tax returns are private. 26 U.S.C. §7213 subsection (a)(1) makes it a felony for any federal employee to disclose tax returns or “return information.” Violating this provision can land the offending bureaucrat in federal prison for up to five years and he can be fined up to $250,000.
2. Tax returns don’t show everything. For instance, they show how much you claim for charitable deductions, but unless you get audited you are not required to show who the recipients were.
3. Tax laws are complex. They include statutory law, IRS regulations, and case law.
4. Tax laws change constantly. Tax Attorneys and accountants spend a lot of time each year studying those changes.
5. Every deduction and credit in the tax code was put there for a worthy purpose. For example, Congress wanted to encourage home ownership, so they made your mortgage interest deductible.
6. Our tax code is used for social engineering. Taxes can be used to penalize disfavored things like smoking, or to reward buying “green” technologies like solar panels.
7. It is not illegal or unpatriotic to pay the minimum amount of taxes possible. As Justice Learned Hand said in Gregory v. Helvering:
a transaction … does not lose its immunity, because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.
8. Good-faith claims of deductions and/or credits may be disallowed by the IRS. This is especially true with new statutory changes to the tax code. Let’s say Congress passes a law creating a tax credit. Your CPA tells you that qualify for it so you claim it. Later, (in an unrelated case) the IRS decides that people in your circumstances are not eligible for that credit. So you file an amended return that does not claim the credit. Later still, someone who was denied the credit sues the IRS (or is charged with falsely claiming the credit), and the court rules that they WERE eligible. So you file another amended return to get the credit.
9. Rich guys like Donald Trump don’t do their own taxes. Nor do they hire an accountant. They hire accounting firms with an army of CPAs and tax attorneys. Those accounting firms can be held liable if they participate in illegal activity. Remember Enron?
Arthur Andersen LLP was an American holding company based in Chicago. Formerly one of the “Big Five” accounting firms (along with PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG), the company had provided auditing, tax and consulting services to large corporations. By 2001, it had become one of the world’s largest multinational businesses.
In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after it was found guilty of crimes in the firm’s auditing of Enron, an energy corporation based in Texas, which had filed for bankruptcy in 2001. In 2005, the Supreme Court of the United States unanimously reversed Arthur Andersen’s conviction due to serious errors in the trial judge’s instructions to the jury that convicted the firm. Despite this, the damage to Andersen’s reputation was so great that it has never returned as a viable business even on a limited scale.
10. The Democrats have been demanding Trump’s tax returns for five years for political reasons. There has never been any reason to believe that Trump cheated on his taxes.
11. The Obama people already went thru Trump’s taxes. Lois Lerner may be gone but Obama still has his minions stationed all thru the federal bureaucracy. If they had found anything they could use they would have leaked it. Now, in desperation, they leaked his tax records anyway.
12. The Democrats, not President Trump, are the ones breaking the law.