What is so compelling about the Trump tax strategy?
Critics and supporters have been outspoken about Republican president-elect Donald Trump’s tax returns recently. According to a Politico report, the focus of the debate has been over the legality of Trump’s tax-minimizing strategies since 1995.
Trump’s tax-minimization strategy draws criticism
In a recent story published in the New York Times, selected sections of Trump’s tax returns in 1995 showed he registered a $916 million loss that year. As a result, this would enable him to avoid any payment of personal income taxes on his returns for up to 18 years.
Critics of the strategy have been vocal because many see this as a potential deciding factor for independent voters. Politico reported that while supporters approved of the strategy, detractors point to the massive loss as proof that either Trump’s business ventures have not been as successful as he reported, or that he has hidden assets and did not pay an adequate share of individual income taxes.
Furthermore, critics have been outspoken about the fact that by Trump not publicly releasing his financial records, he is withholding the identity of debtors and creditors who could have influence over his campaign. This could leave the door open to special interest groups guiding some of Trump’s policies as president. Ultimately, this could tarnish his position as a self-made business success to his voter base.
Supporters approve of the Trump tax strategy
Those in favor of Trump’s tax avoidance strategy point to his prowess as a businessman. They also assert that the manner in which he has minimized his individual tax return is well within the legal application of the IRS tax codes.
Supporters have additionally been on record to state that his individual tax returns should be withheld because he is not a public official. In fact, former New York City mayor Rudy Giuliani argued recently that not releasing these records is part of a fiduciary obligation:
“You are ignoring completely the fiduciary obligation that he has to all the people around him to run his business at the lowest possible expense,” Giuliani explained.
Whether Trump’s strategy is part of a fiduciary duty to his shareholders is still up for debate. However, it remains to be seen if him taking the loss on his individual income tax returns is part of this fiduciary obligation. The impact of this revelation could be significant come election day for those both in favor and against the tax minimization strategy.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, James McDonough, at 201-806-3364.