Too Big to Fail, Too Small to WinPosted: November 20, 2016
Just this month, the New York Times treated the public to an election season October surprise by publishing part of Donald Trump’s tax returns for 1995. In it he claims almost $1 billion in tax losses. Trump was able to use these losses to reduce his own tax liability for an estimated 18 years.
The fact that a mega-wealthy person who lost a billion dollars was able to avoid paying federal income taxes for two decades, without suffering any penalty, is galling and obscene. Trump said in the debate, “Shows how smart I am.” This disclosure, however, reveals something basic to the US tax code: it guarantees profit and wealth for the already very rich. There are many provisions for the mega-wealthy to love, like the capital gains rate, carried-interest loophole, asset depreciation, and the charitable donation write-offs.
Recently Warren Buffett, a very rich man who supports liberal causes, voluntarily published his tax returns. That brought a response from a NY Times reader who wrote about the unfairness in our economic system. He explained, “The combined income of my wife and me is a small fraction of Mr. Buffett’s, but year after year we have paid an effective tax rate that is nearly double his.” The writer concluded that “this fact is a symptom of an economic system that has lost its way.”
It is telling that at the same time that the US tax code safeguards rich people’s wealth, US social policy does not ensure a decent standard of living for ordinary Americans who have no guaranteed right to housing, medical care, or food.