New York Times Hypocrisy Exposed After Blasting Trump for Not Paying Taxes
So, just what is Trump being accused of?
Well, it seems the stickler for the New York Times, in their Oct. 1, 2016 article, revolves around a $916 million net operating loss (NOL) dating back to 1995. The Times learned about this loss after one of their reporters, Susanne Craig, found pages of Trump’s 1995 tax returns in her mailbox.
The article, in an accusatory tone, goes on to say that Trump used the NOL to reduce his taxable income of other years, thereby avoiding the payment of taxes.
In the first place, tax avoidance is perfectly legal. Tax evasion is not. But the New York Times already knows this. So, obviously the article was politically motivated.
Unfortunately, The New York Times was being deceptive in its reporting, exploiting public ignorance of the tax code to negatively influence public opinion of Trump. The fact is, Trump broke no laws, and the Times knows it; he simply did what every taxpayer tries to do each tax season, including The New York Times (see below), slash taxes.
What the New York Times Didn't Tell You:
In 2014, The New York Times had a pretax profit of $29.9 million and received a $3.5 million tax refund (Forbes, Oct. 1, 2016). This means, its post-tax profit was higher than its pre-tax profit. The explanation for this was, "The effective tax rate for 2014 was favorably affected by approximately $21.1 million for the reversal of reserves for uncertain tax positions due to the lapse of applicable statutes of limitations.” Pretty nifty accounting work.
In another year prior to 2014, The New York Times received $26 million in exchange for keeping jobs in New York City (Forbes, Jan. 31, 2016, New York Times Hypocrisy On Corporate Taxes Reaches Record High).
So, it seams The New York Times has tax advisers quite adept at taking advantage of any tax break they can get their hands on. Maybe Trump needs to put them on his payroll.
The New York Times article also referred to the Trump family as one of "America's dynastic families" and implied that an NOL deduction is only available to "byzantine networks" who are allowed to claim a "dizzying array of deductions". Very colorful words, but meaningless and utter nonsense!
A word about Net Operating Losses (NOLs):
The fact is, you don't even have to be in business to be able to claim an NOL. And, you don't have to be a high income earner to end up with an NOL.
While business losses are the most common cause of NOLs, individuals who suffer a casualty or theft loss involving property used for personal purposes may also claim an NOL, provided the casualty or theft loss creates an NOL.
This tax break is available to individuals who are not in business because of a tax rule that treats casualty and theft losses involving property used for personal purposes as business losses for NOL purposes. (Determining the amount of an NOL involves a fairly complex computation.)
The potential for Trump deducting the NOL for 18 years, mentioned by the New York Times, comes from the tax rules in effect at the time, which were that you could carry an NOL back 3 years and forward up to 15 years.
However, it was not known how long it took Trump to fully use up the $916 million NOL. It could have been used up in a single year, depending on taxable income. But as Hillary Clinton is famous for saying, "what difference at this point does it make", since nothing illegal was done.
Two famous tax quotes by Judge Learned Hand say it all:
Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.
Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)
Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.
Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) - dissenting opinion
- You don't have to be a member of a "dynastic family" or be involved in "byzantine networks" to benefit from NOLs.
- Tax avoidance is not only legal, there is no public duty to pay more taxes than is legally required.
- Legally minimizing one's taxes is not only patriotic, it's moral.