Trump stiffs the IRS

[GO-NAD!]

No one with a tax return of the complexity of Trump's does their own taxes. In fact, I would guess it takes a pretty sizable team of people, and I can't imagine how much it costs. Over $100K perhaps?

Oh, for sure. When I said "he", I thought it was understood that it's his signature on the return, not the firm fudging...er'...I mean completing them.

 

[Irvrobinson]

Oh, for sure. When I said "he", I thought it was understood that it's his signature on the return, not the firm fudging...er'...I mean completing them.

Actually it's both.

 

[Old Onkyo]

I know someone who has a bunch and one day, we were talking about 'things' and she said "Well, if I'm paying a big tax bill, it means I made money". I would like to see everyone come to that conclusion.

I told that to my mother a few years ago. She is currently 85, still complaining and still paying. Personally, I have always looked at taxes as the cost of doing business.

 

[Irvrobinson]

I told that to my mother a few years ago. She is currently 85, still complaining and still paying. Personally, I have always looked at taxes as the cost of doing business.

For a business that's true. To some extent business control their prices, so businesses don't really pay taxes, consumers do. A lot of people think that raising corporate taxes lowers profits, but in reality higher business taxes tend to just raise prices, because they apply to every profitable business (that are not using previous losses to offset current profits). For wage-earning individuals, however, higher taxes means less disposable income. A tax increase doesn't get you a pay raise.

 

[Old Onkyo]

For a business that's true. To some extent business control their prices, so businesses don't really pay taxes, consumers do. A lot of people think that raising corporate taxes lowers profits, but in reality higher business taxes tend to just raise prices, because they apply to every profitable business (that are not using previous losses to offset current profits). For wage-earning individuals, however, higher taxes means less disposable income. A tax increase doesn't get you a pay raise.

My bad, i meant that in a generic sense. My point to her is that she pays because of her income, she could not have an income.....I made so little last year I qualified for the Covid relief check, shouldn’t be tied to your income but net worth. We gave it away.

 

[highfigh]

For wage-earning individuals, however, higher taxes means less disposable income. A tax increase doesn't get you a pay raise.

Yup- wage earners would have to demand a raise every time taxes increase.

 

[GO-NAD!]

For a business that's true. To some extent business control their prices, so businesses don't really pay taxes, consumers do. A lot of people think that raising corporate taxes lowers profits, but in reality higher business taxes tend to just raise prices, because they apply to every profitable business (that are not using previous losses to offset current profits). For wage-earning individuals, however, higher taxes means less disposable income. A tax increase doesn't get you a pay raise.

I agree...to a point. If a market will bear a price increase, due to a tax increase, without a significant loss of sales, that would be true. But if a tax increase pushes the price higher than people are willing or able to pay, the vendor must accept a smaller profit, or find some way to cut other costs. Does that not make sense?

 

[TankTop5]

If only that were true, but more likely the worst-case scenario is that he might have to pay some back taxes and penalties. The combination could cost him millions, though I highly doubt it, but prison time is, IMO, a 1:1000 shot.

The two most likely problems he runs into are what constitutes a valid business loss and what qualifies as a valid business expense. Both are subject to interpretation, the investigations are tedious and time-consuming, and Trump has probably hired CPA and JD superstars who will be up against the best GS-15s the government has to offer. And it could take years to resolve the mess.

He has been under the LB&I IRS audit for years. It’s a joke thinking the New York Times just gonna uncover some thing illegal. This is the definition of fake news, the tax system was designed to give rich people loopholes to avoid paying taxes.

 

[Irvrobinson]

I agree...to a point. If a market will bear a price increase, due to a tax increase, without a significant loss of sales, that would be true. But if a tax increase pushes the price higher than people are willing or able to pay, the vendor must accept a smaller profit, or find some way to cut other costs. Does that not make sense?

Corporate income taxes aren't especially onerous, because they only tax earnings, not revenue. Tariffs, on the other hand, can raise costs by, as an example, 25% for important components or assemblies or entire products, and depending on the elasticity of demand the additional price increases could push consumer prices high enough that demand falls off. Corporate profits are typically in the range of 5-20% of revenue, so a corporate tax increase from 21% (current) to 28% (Biden agenda) represents a tax increase of 33%, but if your net profit before taxes is about 7% of revenue (to use GM as an example in 2019, a normal year), then the 33% tax increase only represents a few percent of revenue, and since it hits all profitable companies equally chances are prices will just be increased to cover the tax effects.

 

[GO-NAD!]

Corporate income taxes aren't especially onerous, because they only tax earnings, not revenue. Tariffs, on the other hand, can raise costs by, as an example, 25% for important components or assemblies or entire products, and depending on the elasticity of demand the additional price increases could push consumer prices high enough that demand falls off. Corporate profits are typically in the range of 5-20% of revenue, so a corporate tax increase from 21% (current) to 28% (Biden agenda) represents a tax increase of 33%, but if your net profit before taxes is about 7% of revenue (to use GM as an example in 2019, a normal year), then the 33% tax increase only represents a few percent of revenue, and since it hits all profitable companies equally chances are prices will just be increased to cover the tax effects.

I have no argument that under some circumstances, businesses simply pass on tax increases to consumers - possibly all of it. It would depend on the product or service and to what degree customers are dependent upon it, wouldn't it?

 

[Irvrobinson]

I have no argument that under some circumstances, businesses simply pass on tax increases to consumers - possibly all of it. It would depend on the product or service and to what degree customers are dependent upon it, wouldn't it?

Absolutely. Take the profoundly odd example of the 1991 Luxury Tax signed into law by George HW Bush, in an attempt to soak the rich to reduce the federal budget deficit. It was a 10% federal tax surcharge on various expensive items, like cars, boats, private jets, jewelry, etc. This tax was high enough that it caused a fall-off in demand for some items you would think wouldn't matter, like yachts and private jets, but the construction and outfitting of many luxury items employ many thousands of highly paid craftspeople, and the bottom line was that the tax put a lot of these people out of work. So... Bill Clinton and a Democratic Congress, under a lot of pressure from various suffering industries, repealed the Luxury Tax law. So here we have a soak the rich tax put in place by Republicans and then repealed by Democrats. It is so ironic I enjoy telling this story.

 

[Trell]

I have no argument that under some circumstances, businesses simply pass on tax increases to consumers - possibly all of it. It would depend on the product or service and to what degree customers are dependent upon it, wouldn't it?

Absolutely, this is the case. A common thing is to tax something as to make it more expensive, and thus reduce consumption of the taxed items or make more efficient use of it. Properly implemented taxation (or reduction) can be a very cost efficient way to change or regulate some types of consumption/behaviour.