STUMP » Articles » Taxing Tuesday (on Monday): Trump Taxes! Surprise Money! Or Not! » 13 May 2019, 04:41

Where Stu & MP spout off about everything.

Taxing Tuesday (on Monday): Trump Taxes! Surprise Money! Or Not!  

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13 May 2019, 04:41

Yes, I know it’s Monday, but I have big news coming out tomorrow, and I do not want to step on it.

Ok, let’s talk about those old Trump tax returns (that I think Trump leaked himself)

MSN: 5 Takeaways From 10 Years of Trump Tax Figures

1. Mr. Trump was deep in the red even as he peddled deal-making advice

“Trump: The Art of the Deal” came out in 1987. It became a best seller — and a powerful vehicle for the self-spun myth of the self-made billionaire that would ultimately help propel him to the presidency.

Mr. Trump has long attributed his first run of business reversals and bankruptcies to the recession that hit three years later, in 1990. But the new tax information reveals that he was already in deep financial distress when his master-of-the-universe memoir hit the shelves.

….
2. In multiple years, he appears to have lost more money than nearly any other individual taxpayer

The tax results for the years that followed trace an arc of continued empire building — and gathering loss.

He bought the Eastern Airlines shuttle for $365 million; it never made a profit, and he spent more than $7 million a month to keep it flying. His new Trump Taj Mahal Hotel and Casino, opened in 1990 with more than $800 million in debt, sucked revenue from his other casinos, pulling them along into the red.

And so, year after year, Mr. Trump appears to have lost more money than nearly any other individual taxpayer, according to the I.R.S. information on high earners — a publicly available database with taxpayers’ identifying details removed. Indeed, in 1990 and 1991, his core businesses lost more than $250 million each year — more than double those of the nearest taxpayers in the sampling for those years.
…..
3. He paid no federal income taxes for eight of the 10 years

Business owners like Mr. Trump may also use their losses to avoid paying taxes on future income. Over the years, those losses rolled into a $915.7 million free pass, known as a net operating loss, that appeared on his 1995 tax returns, pages of which were mailed anonymously to The Times during the 2016 campaign.
…..
4. He made millions posing as a corporate raider — until investors realized he never followed through
…..
5. His interest income spiked in 1989 at $52.9 million, but the source is a mystery

Amid the hundreds of figures on 10 years of tax transcripts, one number is particularly striking: $52.9 million in interest income that Mr. Trump reported in 1989.

In the three previous years, Mr. Trump had reported $460,566, then $5.5 million, then $11.8 million in interest.

The source of that outlier $52.9 million is something of a mystery.
…..
Mr. Trump’s interest income fell almost as quickly as it rose. By 1992, he was reporting only $3.6 million.

I’m not sure that the specific outlier really tells us anything. Many people have extremely volatile incomes when you’re in that stratosphere.

But let’s ignore that for a moment: why are all these people hyperventilating over Trump’s tax returns?

They are highly unlikely to find the level of detail needed to indicate pay-offs, etc. I’ve had non-wage income sources, and the IRS mainly cares that I don’t under-report, and that I don’t classify a certain type of income in a way that’s tax-advantaged when it’s not. It doesn’t care enough for me to indicate that I made my side money, for example, on a webcast on graphing versus a spreadsheet I made to project annuities.

I can think of several potential motives, from trying to humiliate and/or expose Trump as a liar re: his supposed riches to trying to catch potential illegalities (that one is highly unlikely, I think, but I have different prior probabilities than the people seeking the returns) to just hoping that, after the Mueller report deflation, they can find that pony in the pile of horseshit.

Good luck with that.

The people who are asking for this info are not tax professionals, and they wouldn’t know how to conduct an audit of anything, much less of tax returns. I don’t even wish them well on their journey of trying to come up with a reason Hillary Clinton lost an election, because they’re not looking in the most likely place. No, not her emails. Her.

Other coverage of the Trump tax returns, so it doesn’t muddy up my lovely tax stories below:

The last two linked items reflect my attitude the most.

Jumping off from Althouse, the kind of people who do understand that type of tax returns do not explain these things for free. They generally do not need to go on TV to get clients. They do not work for newspapers or TV news programs (because they can make more money doing actual tax work), and they certainly aren’t going to do an analysis for free.

Maybe there are a couple such people. But it’s going to be not very interesting, I bet.

Jumping off from Jane the Actuary, I find it highly unlikely there is anything of obvious illegality in there. It’s not like Trump filed his own taxes. He paid people to put that stuff together. It’s not easy to get away with elaborate tax fraud for decades, if that’s what you’re looking for. If you’re trying to find evidence for bribery by foreign agents… what level of detail do you think you’ll find?

I think it would be very illuminating if all members of government were required to publish their tax returns while they were elected officials. I would love to see Nancy Pelosi’s and Bernie Sanders’s returns, for example. How, exactly, did they get so rich on their politicians’ pay?

SURPRISE MONEY IN ILLINOIS

I am highly skeptical about an “extra” $1.5 billion showing up in the middle of a contentious fight over budget and taxes.

Let’s go with the press release, which has a pensions hook:

May 7, 2019

Dear Leaders, Appropriations Chairpersons and Appropriations Spokespersons:

We write to share the good news that Illinois received significantly stronger-than-expected revenues in April.

More than $4.1 billion in individual and corporate income tax revenues were deposited into the General Funds in the month of April 2019, up $1.14 billion or 38% from April 2018 income tax deposits of $2.999 billion. This is also more than $1.5 billion more than internally projected for April 2019.

A number of factors likely contributed to this increase, including the performance of the stock market, better federal reimbursement for Medicaid, the elimination of the federal state and local tax deduction and additional changes in the federal tax law that meant many taxpayers didn’t withhold sufficient taxes through payroll deductions, backloading their end-of-year tax payments. Anecdotally, strong revenue collections occurred in many other states in April. Additional data and analysis are required to present a comprehensive explanation for the revenue shift, and our staffs are working to provide the General Assembly with a more detailed analysis.

As an immediate result of the strong April performance, coupled with revenue collections year-to-date, the State of Illinois will be able to address most of the $1.6 billion shortfall in the enacted FY19 budget because of the April revenues alone. GOMB and the Department of Revenue will be increasing the forecast of general funds individual income taxes by $1.249 billion and general funds corporate income taxes by $186 million, for a total revision of $1.435 billion, a revision of approximately 7% from February 2019 income tax estimates.

Additionally, based on this strong performance, the Department of Revenue has also re-evaluated its FY20 projections. DOR is also projecting that income tax revenue for the FY20 general funds budget will be roughly $800 million higher than initially projected, or nearly $22 billion instead of $21.18 billion. This represents income tax collections roughly 4% higher than the initial base projections.
…..
Governor Pritzker remains committed to a financially responsible budget that addresses Illinois’ outstanding obligations, and recommends that these additional revenues can be dedicated to the state’s statutory FY20 pension payment.
……

Sincerely,

David Harris
Director
Department of Revenue

Alexis Sturm
Director
Governor’s Office of Management & Budget

[Emphasis added]


Look, I’m not a personal tax expert, but I know how I’ve done my own withholding, and that I had to do federal, NY, and CT all separately. My understanding is that state income taxes generally don’t let you deduct for federal taxes (unlike federal allowing it the other way, even with the SALT cap (SALT CAP ZERO! NOW!))

And my confusion stemmed from me primarily being a wage earner — as opposed to owning a business and having business income. I forgot that the TCJA changed the definition of taxable income!


The tax code is very complicated, and I forgot that there were issues with the states simply taking the federal definition of taxable income … because the specific technical details I dipped into were for regular wage-earners and (for my day job) the effects on life insurers (and let me tell you, I got a lot of mileage on the changes to insurance companies).

Now, here’s a different response:


Let’s look at that press release:

“Last week in testimony before the House and Senate Appropriations Committees, I was pleased to announce that our April revenues were $1.5 billion higher than expected. However, I also sounded an important note of caution about those revenues. It is important to keep in mind that we still face a $6-to-$8 billion backlog of pending bills with no dedicated revenue stream to pay them. We have aggressively targeted the state’s highest-interest-accruing bills with those receipts, bringing the backlog lower than it would otherwise be, to $6.07 billion as of today.

First, let’s stop right there. What do bills and revenues have to do with each other? (I’m not joking about this). The bills do not create the revenues, nor vice-versa. Not in government.

So, I want to know what the cause of higher-than-expected revenues. Not about the bill backlog, which we already know about.

“While we cannot confirm or deny the Dept. of Revenue’s projection of $800 million more than expected for Fiscal Year 2020 at this time, we are hopeful and will continue to research this possibility thoroughly. My office has prioritized pension payments and debt service since I took office and that will be our policy going forward. “

And that’s the full press release. My takeaway is that they don’t know why there was more in revenues, and whether that will extend to the full year. I can respect that.

GRADUATED TAX STUFF

I was going to put this in the tax stories below, but I want to do a quick refutation here.

CTBA at Medium: States with graduated income taxes are more than twice as likely to cut taxes as to raise them

So, here is a pie chart.

Notice something missing?

What’s missing is whether level tax states increased or decreased taxes.

I’ll explain why in a moment.

Here’s another graph:

The reason I’m asking this is if all states, whether with graduated income taxes, or with level income tax rates, generally decreased their tax rates… then it may be something more specific to the time period being investigated, as opposed to something indicative of graduated tax rates.

Now, if those level tax states were much more likely to lower their tax rates than the graduated tax places, or at least were less likely to raise tax rates, then you’d actually be proving something closer to the cause-and-effect case.

I leave it to somebody else to explain to the CTBA about how this sort of inductive reasoning works. They’re not at all showing whether graduated rates make it more or less likely to increase or decrease tax rates.

The other issue is that there are rates going back to 2000 that are covered…and I thought maybe there was something untoward that the two prior years were excluded from the analysis. However, I went to look, and the way the Tax Foundation presented the info for 2000-2001 was different from that of 2002 and after. So that seems fair.

TAX STORIES

I don’t think Trump’s tax returns are really going to do much for the 2020 election, but y’all waste your time, Dems.

TAX TWEETS










Dear lord, I do not find cluelessness cute once one is above 10 years old.








Hey now, the UK could do as the US does and make it really tough to escape US taxes. Best wishes.


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