Income taxes are a financial burden on many Americans and the buoyancy of billionaire Donald Trump’s presidential campaign seems to underscore anger over economic forces that have left many out.
USA Today reports that perhaps the GOP front runner has been hesitant to release his tax returns because they will show the system his supporters are angry about is rigged in his favor.
“The big story is not the true size of his wealth, but about how Congress has turned the income tax into a source of massive wealth for many of the richest Americans, including Trump,” writes Pulitzer Prize-winning investigative journalist David Cay Johnston.
Johnston explains how the American tax code makes the rich richer while everyone else bears the burden.
It is possible that Trump has not paid federal income taxes in many years — making him one of the “47 percent” of Americans the Republican’s previous presidential nominee was caught complaining about.
Tax laws require property owners like Trump to depreciate the value of buildings, even if the market value of the building is going up. If landlords on paper earn just a dollar less than “traditional income” from work and business due to depreciation, they owe no income taxes.
“To understand how reporting a negative income can be profitable, take a look at your pay stub,” Johnston explains. “If Congress gave you a deal similar to Trump’s, instead of the government deducting taxes from your paycheck, you would keep that money — like an interest-free loan — and could use it to make more money.”
Casino documents uncovered by Johnston show that Trump used real estate depreciation to avoid paying income taxes shortly after graduating from college.
Roughly 2.1 million Americans report negative income yearly, but Congress doesn’t know how many of those are failed small businesses and how many are billionaire landlords like Trump. Johnston says the IRS will not release a number.
Trump, a reality TV star and real estate mogul, is the only candidate in the race that has so far refused to release his tax information. He says it’s due to an audit, but Johnston points out that doesn’t stop him from releasing his returns, or returns from previous years that are not being audited.
Instead Trump may be hiding behind the audit because he has garnered support by ratcheting up anger among economically depressed people. He positions himself as the people’s hero against the Washington elite. But Trump’s tax returns may show that he is the very enemy he promises to thwart.
“The big story in Trump’s tax returns is that Congress has created two income tax systems, separate and unequal,” Johnston writes. “One system burdens most Americans. The other enriches the donor class.”