Editorial: Trump’s likely tax refusal a widespread issue in U.S.

Published: 10/1/2016 11:00:22 PM

Donald Trump, who couldn’t resist snapping at any bait Hillary Clinton dangled in front of him Monday, famously said, when asked about paying no federal incomes taxes, “That makes me smart.” Smart, and rich enough to hire an army of tax lawyers and accountants that include a former chief counsel of the IRS itself.

Clinton pointed out that Trump paid “zero for troops, zero for vets, zero for schools or health.” Moments later Trump doubled down and, when Clinton said that perhaps he hadn’t paid taxes in a lot of years, he gave the justification voiced by many tax avoiders and cheats, “It would be squandered too, believe me.”

Trump probably broke no law by paying no taxes, nor did the 35,000 households according to the IRS who had incomes of $1 million or more that year and paid nothing in 2012, or the 27 companies on Standard and Poor’s 500 list who paid no taxes last year. Congress has manipulated the tax code to permit that to happen and it’s a big part of why income disparity is at record levels. They’ve also starved the IRS to make it harder for the agency to go after tax cheats.

By most estimates, nearly half of all tax filers pay no federal income taxes. That’s because they’re retired or earn too little. But most of them do pay state and local taxes, federal taxes on gas and tires and the like, Medicare and Social Security payroll taxes. Payroll taxes for most households in fact, total more than their income taxes and they are less progressive, since Social Security caps taxable income at $118,500. A worker earning $40,000 pays 6.2 percent of his income, someone earning $400,000 pays an effective rate of 1.8 percent. In the 1950s corporations paid about 30 percent of federal taxes. Last year, that figure was 10.8 percent. Contributions from the rest of us, and a bigger national debt, covered the difference.

Paying no taxes when one has the means to do so may be legal, but only in certain “starve government” conservative and Libertarian circles, is it also honorable or fair. Working class voters who can’t hide or shelter income because it comes off the top of their paycheck should decide if they want to pick up Trump’s share of the tab for national defense or rebuilding the crumbling infrastructure.

Trump doesn’t have the excuse cited by corporate CEOs from companies like Apple, Walgreens, and Walmart, who are sheepishly telling Congress why they chose to dodge taxes by relocating their headquarters to low-tax nations like Ireland.

A corporation’s board and executives have a fiduciary responsibility to do all they can to maximize profit for shareholders, the argument goes. It would be irresponsible to not take advantage of a legal opportunity to increase that profit by avoiding taxes. But Trump’s companies are private. He is enriching only himself.

A reform of the 74,000-page tax code is necessary. Einstein, while attempting to fill out his tax return said, “This is too difficult for a mathematician. It takes a philosopher.” So is a redefinition of corporate fiduciary responsibility. That should include a responsibility to reward and reimburse the nation that made success possible, that educated the company’s workers, protects its intellectual property, maintains the roads their trucks travel on, preserves domestic order, pursues the people who steal from them and much more.

The Clintons aren’t billionaires but they make a lot of money, $10.6 million in 2015 on which they paid $3.6 million in taxes, or 35 percent. The difference says a lot.


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