Letter: New York Times does hatchet job on Donald Trump
NYT does hatchet job on Trump
The New York Times discovered one page each from Donald Trump’s 1995 state income tax returns in New York, Connecticut and New Jersey. That’s three pages out of hundreds if not thousands of pages.
The New York Times emphasized that Trump’s New York return showed federal income of minus $915 million. That was almost entirely attributable to one line item: negative “other income” (i.e., a loss) of $909 million. The Times bends itself into a rhetorical pretzel trying to characterize the tax consequences of that $909 million loss as somehow shady. Let’s unwrap that.
The Times didn’t disclose any detail to explain the loss. But we know from public information that the early-to-mid 1990s was a time of financial stress in Trump’s business empire. He had to sell several properties and restructure debts on others. Trump easily could have incurred a $909 million loss from sales of troubled properties. But that wouldn’t have been an imaginary loss. To sustain a $909 million loss, Trump would have to have invested much more than that in those properties when he built or bought them. So, we have a real estate magnate who played in the very big league who lost $909 million of his money in financially stressful times. What should be the tax consequences of that?
My dad was a business owner. In some years he had a profit and in others he had a loss. I’m sure there was a year when he lost at least $900,000 in his business. In other years he made that money back. Income tax rates then were about 50 percent. If my dad had been taxed at 50 percent on a $900,000 profit in one year ($450,000 of tax), but got no tax relief when he lost that same amount in another year, he would have paid $450,000 of tax on absolutely no net income (a profit in one year exactly offset by another year’s loss).
Business cycles occur over many years, not just one year. It’s understood that businesses have ups and downs. Therefore, our tax code has virtually forever permitted losses in one year to offset profits in other years. This results in a tax system that taxes long term business income results.
Did The New York Times explain this aspect of our tax system to enlighten its readers? Of course not. It turned an unremarkable example of the application of long standing tax law into a political slander job on Trump. The journalism profs who trained these people should be ashamed of what they have produced.