The Corner

Fiscal Policy

Why Nobody Cares Much about Trump’s Taxes

President Donald Trump speaks at the Cobb Galleria Centre in Atlanta, Ga., September 25, 2020. (Tom Brenner/Reuters)

At Fox News, Howard Kurtz argues that the New York Times report on Donald Trump’s taxes will affect the election “barely at all.”

These are eye-popping revelations, but most people won’t wade through the details, which are complicated as hell. And even the Times doesn’t claim that Trump broke any laws. He took advantage of a labrynth [sic] of legal deductions that are available to people who traffic in real estate and investments–unfairly, in my view, but that’s the system approved by Congress.

I think that’s about right but would add a couple of things. One is the personality-cult, can-do-no-wrong aspect of Trump fandom — and it is a fandom — which simply does not respond to this kind of thing. I have a hard time imagining the person for whom this, of all Trump’s shenanigans, is the final straw. If Trump loses $400 million, then that is just evidence, from that point of view, of his ineffable business genius. As Kurtz writes, most people aren’t going to dig in very deep. As Paul Krugman argues, the really eye-popping part of the Times story isn’t the tax avoidance but what an incompetent businessman Trump is.

Another aspect, which I mentioned in my newsletter today, is that Americans are really quite tolerant of petty personal corruption in tax matters. Our tax code is complex and filled with giveaways to various political constituencies, and none of us is shocked to learn that a bartender or a waitress does not report 100 percent of cash tips for tax purposes. Is that tax fraud? Of course it is. Is it a crime? Yes. Does anybody care? No. But, for comparison, the tax avoidance attributed to Trump is, as far as I can tell, entirely legal.

And let’s not pretend that the Democrats are against tax giveaways to rich people. Nancy Pelosi wants to let up on the SALT cap, which would mean a tax break for high-income people back home in California. The stimulus measure that Trump exploited was in no small part a Joe Biden production.

There are all sorts of ways around this stuff. The truth is that almost no one in either party wants to simplify the tax code or — here is the perverse part — to make it more effective. The Republicans have a pretty straightforward position on this: They want (at least they say they want) less spending and lower taxes. (Just don’t ask them what they want to cut.)

The Democrats have, in a way, a bigger challenge: The left wing of the Democratic Party wants to build a U.S. version of a Scandinavian welfare state, but very, very few Democrats are willing to speak honestly about what that means — a huge tax increase on the middle class. In the Scandinavian countries (and in much of Europe) people with middle-range incomes pay relatively high tax rates: If your household earns $100,000 a year in Sweden, you pay an effective tax rate of 40 percent. In the United States, your effective rate would be about 15 percent — just over a third the tax burden. (Insert here the usual caveats about the complexities that make straightforward comparisons . . . not straightforward.) “But they get lots of good stuff for their taxes in Sweden,” progressives say. Indeed, they do. But Democrats rarely if ever acknowledge just how big a tax increase on the non-gazillionaire would be required to fund the welfare state they imagine, preferring to pretend that it could be paid for by raising taxes on the likes of Donald Trump.

If the tax story doesn’t undo the Trump campaign, it will be in part because many Americans do not think highly enough of our tax system to chafe at somebody’s getting over on it. And Howard Kurtz is right: This is on Congress.


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