An explosive New York times investigationtion reveals that President Donald Trump, a supposed connoisseur of business billionaire whose name adorned everything with steaks To golf course office towers – only paid $ 750 in taxes in 2016 and 2017.
Trump’s political opponents struck down him for the meager tax payments, but was their energy misplaced? William Dickens, distinguished professor at the University of Economics and Social Policy at Northeastern, asserts that if the Times The report describes some “questionable deductions”, more generally, “Trump is simply taking advantage of many legal deductions.”
According to Times report, Trump claimed the majority of these deductions in the form of depreciation, a type of tax deduction based on the decreasing value of tangible assets, such as real estate, over time.
The report questions the extent to which Trump’s substantial real estate Actually depreciated. And indeed, Trump has been involved in a federal Internal Revenue Service audit for nearly a decade.
But the mechanism itself – paying less and less tax on assets that lose value over time – is a legal part of the tax code, designed to encourage capital investment, says Dickens, who is also visiting scholar at the Federal Reserve Bank of Boston.
For tax purposes, Dickens says, assets often depreciate faster than they actually lose value. It’s a system designed by Congress to get people to buy things: “It’s cheaper in the long run for you to make an investment if you can pay it off faster,” Dickens says.
“That’s what’s interesting about depreciation,” he says. “It was used as a political lever.
Dickens says parts of the U.S. tax code, such as depreciation, were put in place to accomplish certain policies – investing in real estate, in this case.
“But we have to ask ourselves: at what cost? Has Congress struck the right balance? ” he says. “It’s hard to argue that people are taking unfair advantage of the tax code when Congress put it in place that way.”
Finding the right balance is important. Federal tax revenues go directly to the government’s general revenue fund, an account used to pay for almost all federal programs except Social Security and Medicare benefits, Dickens says.
“Almost everything you can imagine the federal government doing is funded by revenues which are largely income taxes,” he says.
Dickens has listed a dizzying array of services, including the military, parks services, the justice system, Medicaid, unemployment benefits, federal housing programs, small business loans, and farm finance, which are funded largely through tax revenues. And it’s not even half.
“If you show me the government budget, I could read for a week,” he said.