Another quick essay stolen from myself over at Quora (I highly recommend the site)
Today, I received a question asking if I "believe that (I) pay more taxes than Donald Trump?" The explicit subtext to the question, presuming a "yes" answer, was "Does that make you less smart or even stupid for paying your fair share of taxes?" [emphasis added]
Since the Monday cage match that masqueraded for a debate between Republican presidential candidate Donald Trump and Democratic candidate Hillary Clinton, I have been almost literally bombarded with posts, tweets, radio ads, expert opinions, and decidedly un-expert opinions about Donald Trump's implicit admission (to some) that he paid no taxes.
To answer the question, no. Of course I don’t.
And neither do you.
I have no idea what Donald Trump’s income taxes are. Frankly, I don’t really care. I have no idea where or when it became expected that our presidential candidates would release their income tax returns, but unless there is something in there that is against the law (and there were, I would *hope* that the IRS would have found it by now and prosecuted him), all that I am going to find out is how good his accountants are. I suspect that, given his riches and access to a veritable army of accountants and attorneys, Donald Trump has been able to take advantage of tax deductions that I can scarcely imagine.
Of course, Trump screwed up, big time, in how he handled this. His "that makes me smart" answer was as glib as it was stupid, and the optics of it were horrible. He practically gave Hillary Clinton and her unpaid servants in the popular press a club with which to beat him.
But the likely fact of the matter is that he, like you, or me, or Hillary Clinton herself, tries to reduce his tax burden as much as is legally possible.
For example, if you pay mortgage interest, I suspect that you take that deduction. I suspect that you take deductions for state income taxes. If you’ve given substantially to charity, do you take advantage of that deduction?
Of course you do.
If you think Trump is “cheating” on his taxes by using the laws that other people, including Mrs Clinton as a senator wrote, then I suggest that you are placing the blame in the wrong place.
Whether Trump should pay more is a different issue, and one we can debate. I suspect also that whatever he has paid in taxes over the years short of 100%, cries from the Clinton campaign that he has not paid “his fair share” would immediately follow.
Have you taken tax deductions? Are you paying your “fair share?” Who decides?
As an aside, what his “fair share” - or yours or mine - is never of course specified. The word “fair” is a children's word.
The tax code is literally hundreds and hundreds of pages long. It was produced by professional politicians who take contributions from lobbyists.
People like, well, Hillary Clinton.
I know what my tax burden is each year, in federal, state, and property taxes. On top of that, I also am tapped for sales, usage, gasoline, and other taxes. In short, I can conservatively say that I pay more than half of my income annually in one sort of tax or another.
That is actually not a problem for me, necessarily. I lived in France for a couple of years, and the tax burden there is far higher than it is in the US. For a start, just about everything you buy has a built-in value add tax of 20%.
We demand all sort of services from government. In France, I liked that there was convenient (if not 100%) reliable public transportation. The parks were generally well-maintained. The city of Paris offers many recreational and other quality of life programmes at zero or low cost.
These things cost money.
As I see it, taxes exist for the sole purpose of raising the revenue needed to provide the services of government that we demand. In my opinion, the use of the tax code to encourage or punish behaviours and outcomes is in a word, abuse.
So, how much should one pay in taxes, given the services we in the USA demand?
One snarky comment about Donald Trump is that his failure to pay "his fair share" (due, ostensibly, to his use of - again, legally allowed - deductions) means that the rest of us get stuck carrying him.
Donald Trump is shifting his obligations to pay for "military, roads, schools" onto your shoulders. Not very nice.
OK. So, when you deduct for mortgage, or charitable contributions, or other items, are you shirking your "fair share?"
I looked through Mrs Clinton's tax return very briefly. On her Schedule A, Mrs Clinton deducted more than a million dollars for gift to charity. That's a big gift. A yuuuge gift. Of that, $42,000 went to the "Desert Classic Charities," whatever that is. The rest - a cool million - went to the Clinton Family Foundation.
I am not going to speculate or carp about the apparent conflict here of charity bootstrapping; but by deducting that "gift," at the Clinton's reported 34.2% effective federal rate, she was able to avoid $342,000 in federal tax obligations.
Applying the standard by which Donald Trump is being evaluated, Mrs Clinton shifted $342,000 of her responsibility for our military, roads, and schools onto you.
Is Donald Trump paying his "fair share?" Is Hillary Clinton? Are you, for that matter? Who is to decide?
The bottom line is this: the tax laws were written by elected officials, not by you or me or Donald Trump. NONE of us volunteers to pay more than we have to, because we are not stupid.
This "issue" is, simply put, bullshit.