Republicans Despise the Working Class

(THIS ARTICLE IS COURTESY OF THE NEW YORK TIMES)

 

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President Trump looking at guests identified as “middle class families.” CreditDoug Mills/The New York Times

You can always count on Republicans to do two things: try to cut taxes for the rich and try to weaken the safety net for the poor and the middle class. That was true under George W. Bush, who sharply cut tax rates on the top 1 percent and tried to privatize Social Security. It has been equally true under President Trump; G.O.P. legislative proposals show not a hint of the populism Trump espoused on the campaign trail.

But as a terrible, no good, very bad tax bill heads for a final vote, something has been added to the mix. As usual, Republicans seek to afflict the afflicted and comfort the comfortable, but they don’t treat all Americans with a given income the same. Instead, their bill — on which we don’t have full details, but whose shape is clear — hugely privileges owners, whether of businesses or of financial assets, over those who simply work for a living.

And this privileging of nonwage income isn’t an accident. Modern Republicans exalt “job creators,” that is, people who own businesses directly or indirectly via their stockholdings. Meanwhile, they show implicit contempt for mere employees.

More about that contempt in a moment. First, about that tax bill: The biggest-ticket item is a sharp cut in corporate taxes. While some of this tax cut might trickle down in the form of higher wages, the consensus among tax economists is that most of the break will accrue to shareholders as opposed to workers. So it’s mainly a tax cut for investors, not people who work for a living.

And the second most important element in the bill is a tax break for people whose income comes from owning a business rather than in the form of wages. The nonpartisan Tax Policy Center has evaluated the Senate bill, which the final bill is expected to resemble. It finds that the bill would reduce taxes on business owners, on average, about three times as much as it would reduce taxes on those whose primary source of income is wages or salaries. For highly paid workers, the gap would be even wider, as much as 10 to one.

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As the Center’s Howard Gleckman notes, this might mean, for example, that “a partner in a real estate development firm might get a far bigger tax cut than a surgeon employed by a hospital, even though their income is the same.” (Yes, a lot of the bill looks as if it were specifically designed to benefit the Trump family.)

If this sounds like bad policy, that’s because it is. More than that, it opens the doors to an orgy of tax avoidance. Suppose that I could get The Times to stop paying me a salary, and instead to pay the same amount to Krugmanomics LLC, a consulting firm consisting of one person — me — that sells opinion pieces. I would probably get a big tax break as a result.

Now, the bill will contain complicated rules intended to limit such gaming of the system, and they’ll probably prevent me personally from taking advantage of the new loophole. But as Gleckman says of these rules, “some may fail and some may work too well” — that is, deny the tax break to some business owners who really should qualify. On average, however, they’re likely to fail: a lot of revenue will be lost to those who game the system. Think about it: We’re pitting hastily devised legislation, drafted without hearings over the course of just a few days, against the cleverest lawyers and accountants money can buy. Which side do you think will win?

As a result, it’s a good guess that the bill will increase the budget deficit far more than currently projected. And meanwhile, after all those promises Republicans made about simplifying our tax system, they’ve actually made it far more complicated.

So why are they doing this?

After all, the tax bill appears to be terrible politics as well as terrible policy. Cutting corporate taxes is hugely unpopular; even Republicans are almost as likely to say they should be raised as to say they should be lowered. The Bush tax cuts, at least initially, had wide (though unjustified) popular support; but the public overwhelmingly disapproves of the current Republican plan.

But Republicans don’t seem able to help themselves: Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can’t contain it.

When I realized the extent to which G.O.P. tax plans were going to favor business owners over ordinary workers, I found myself remembering what happened in 2012, when Eric Cantor — then the House majority leader — tried to celebrate Labor Day. He put out a tweet for the occasion that somehow failed to mention workers at all, instead praising those who have “built a business and earned their own success.”

641COMMENTS

Yes, it was just a gaffe, but a revealing one; Cantor, a creature of the G.O.P. establishment if ever there was one, had so little respect for working Americans that he forgot to include them in a Labor Day message.

And now that disdain has been translated into legislation, in the form of a bill that treats anyone who works for someone else — that is, the vast majority of Americans — as a second-class citizen.

THE REPUBLICAN TAX FRAUD AGAINST THE NON TOP 1% RICHEST

(THIS ARTICLE IS COURTESY OF THE WASHINGTON POST)

 

As tax plan gained steam, GOP lost focus on the middle class


A statue of George Washington stands in the Capitol. (Andrew Harrer/Bloomberg)
 December 9 at 7:16 PM
The GOP tax plan on the cusp of becoming law diverges wildly from the promises President Trump and top advisers said they would deliver for the middle class — an evolution that shows how traditional Republican orthodoxy swamped Trump’s distinctive brand of economic populism as it moved through Washington.The bill was supposed to deliver benefits predominantly to average working families, not corporations, with a 35 percent tax cut Trump proposed on the campaign trail as part of the “Middle Class Tax Relief and Simplification Act.”

“The largest tax reductions are for the middle class, who have been forgotten,” Trump said in Gettysburg, Pa., on Oct. 22, 2016.

But the final product is looking much different, the result of a partisan policymaking process that largely took place behind closed doors, faced intense pressure from corporate lobbyists and ultimately fell in line with GOP wish lists.

As top lawmakers from the House and the Senate now rush to complete negotiations to push the tax plan into law, it amounts to a massive corporate tax cut, with uneven — and temporary — benefits for the middle class that could end up increasing taxes for many working families in future years.

 3:19
5 tax issues Republicans need to resolve in conference

Now that the Senate and the House have passed two tax bills, there are some crucial differences they need to resolve in conference.

All told, the plan would cut taxes for businesses by $1 trillion, would cut an additional $100 billion in changes to the estate tax for the wealthy, and spreads the remaining $300 billion over 10 years among all households at every income level.

White House officials defend the tax bill emerging from the House and Senate negotiations, saying it follows through on Trump’s long-held promise of benefits for the middle class through a combination of exempting more income from taxation, expanding a tax credit benefiting families and cutting business taxes in a way that will flow through to workers in the form of higher wages.

“The middle class gets a tremendous benefit,” Trump said Wednesday.

Yet a review of more than 40 public statements that stretch back to the 2016 campaign and interviews with key officials in the White House and Congress shows how Trump and his top advisers have continuously prioritized corporate cuts — even though they have promised that middle-class cuts would be their focus.

Over several months, tax cuts for families were either stymied or scaled back. And corporate benefits only grew, a development that increasingly made some Republicans nervous as they saw the bill’s true impact.

“Fundamentally, the bill has been mislabeled. From a truth-in-advertising standpoint, it would have been a lot simpler if we just acknowledged reality on this bill, which is it’s fundamentally a corporate tax reduction and restructuring bill, period,” said Rep. Mark Sanford (R-S.C.). “I think they were particularly concerned about innuendo and what that might mean, so it was labeled as a middle-class tax cut.”

Big promises

After Trump was elected, his transition advisers faced immediate questions about whether he’d hold true to his promise of a tax cut focused on the middle class.

They could not have been clearer.

“Any reductions we have in upper-income taxes would be offset by less deductions, so there would be no absolute tax cut for the upper class,” Steven Mnuchin, Trump’s national finance chairman and future Treasury secretary, told CNBC.

Sen. Ron Wyden (Ore.), the ranking Democrat on the Senate Finance Committee, dubbed it the “Mnuchin Rule.”

After Trump was sworn in, his top aides immediately began discussions with House and Senate leaders on how to combine his campaign promises with long-held GOP views that cutting taxes for the wealthy and corporations ultimately benefit workers.

Inside the White House, Trump was being urged by his chief strategist, Stephen K. Bannon, a key voice behind the president’s economic populism, to hit the very wealthy.

At a meeting in April, Bannon urged that the Trump tax plan create a new 44 percent tax rate on income above $5 million, said three people briefed on his proposal who weren’t authorized to talk about Oval Office discussions. He argued that this was a way to ensure that the wealthiest Americans didn’t benefit too much from any changes and that working-class Americans could support the proposal.

Bannon “pushed that for several weeks as a way to gather political support for the tax bill. He’s more of a populist, obviously,” said Steve Moore, a conservative economist who helped Trump craft his tax plan during the campaign.

Mnuchin and National Economic Council Director Gary Cohn, both former bankers at Goldman Sachs, argued against the 44 percent tax rate, saying such a high rate would harm investment, pile up costs for small businesses and ultimately hurt growth.

As Trump neared his 100th day in office in late April, he was becoming restless because he didn’t have a concrete tax plan.

So he ordered Cohn and Mnuchin to present a version of the tax plan to the public by April 26. They scrambled to put together a one-page blueprint that called for lowering tax rates on all Americans and exempting more income from federal income taxes. The document said it would “provide tax relief to American families — especially middle-income families.”

But there was no mention of a 44 percent rate. Rather, the document revealed other clues that foreshadowed how the tax plan would take shape. It called for eliminating the estate tax and the alternative-minimum tax and lowering the top income tax rate — changes that would all benefit the wealthy.

As they faced questions about those provisions, White House officials began to walk back the promises about the wealthy not winning in the tax plan.

“What I said is the president’s priority has been not cutting taxes­ for the high end,” Mnuchin said in May at the Peter G. Peterson Foundation’s 2017 Fiscal Summit. “His priority is about creating a middle-income tax cut. So we’ll see where it comes out.”

Abandonment

Just after midnight on July 28, Sen. John McCain (R-Ariz.) shocked the Republican Party by voting to end a GOP effort to repeal the Affordable Care Act (ACA).

The summer had made at least two things painfully clear to Republican leaders.

There was virtually no hope of getting Democrats, even red-state moderate Democrats such as Sen. Joe Donnelly (Ind.) or Sen. Joe Manchin III (W.Va.), on board with the plan. That meant Republicans were going to have to make it on a party-line vote, and, as the ACA experience had reminded them, they had only two votes to spare.

So leaders began to make a priority of what they thought the entire party could rally around: big corporate tax cuts. The idea of reducing tax rates on American businesses had been core to the identity of the Republican Party ever since President Ronald Reagan did it as part of a comprehensive tax overhaul in 1986.

Within the White House, Cohn and Mnuchin were running the show. Bannon, a deeply controversial figure in the administration, had left, a voice for a more populist tax plan exiting with him.

On Sept. 27, the White House and GOP leaders issued another tax blueprint, this one called the “Unified Framework for Fixing Our Broken Tax Code.” It proposed reducing the current seven brackets in the individual tax code to as few as three, dropping the corporate tax rate from 35 percent to 20 percent, and creating a new rate of 25 percent for millions of companies that pass their income through to partners and sole proprietors, changes that could help small businesses but also law firms and professional sports teams.

Nonpartisan tax experts estimated the vast majority of the plan’s benefits would flow to the wealthy. Trump, by contrast, insisted that it would help the average worker.

“Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected,” Trump said on the day of the plan’s release. “They can call me all they want. It’s not going to help. I’m doing the right thing, and it’s not good for me. Believe me.”

His advisers couldn’t say the same.

“When you’re cutting taxes across the board,” Mnuchin told Politico, “it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class.”

Seeking balance — and failing

Until now, Republicans had the benefit of not explaining how they’d pay for their tax overhaul, which was going to cost trillions of dollars without offsets. Ultimately, Republicans agreed to borrow up to $1.5 trillion to finance the tax cut.

The $1.5 trillion ceiling on borrowing would ultimately force Republicans to make tough trade-offs between helping the middle class on the one hand and the wealthy and corporations on the other.

In writing their bill, House GOP leaders had created a new $300 “family flexibility credit” that could help Americans lower their taxable income. It wasn’t large, but it would be widespread — and an easy way for Republicans to show they were trying to help the middle class.

But the night before they would release the bill, when top tax writer Kevin Brady (R-Tex.) was trying to sort out the tax changes and monitor the performance of his Houston Astros in the final game of the World Series, they made a major change to this provision, according to a person briefed on the changes who was not authorized to discuss private congressional deliberations.

Corporations were concerned their tax cut would last only eight years, a limitation that was necessary to keep the bill under the $1.5 trillion limit. Brady agreed. So in a last-minute decision, Republicans cut the duration of the family tax credit in half — ending it after only five years — to make the corporate tax cut permanent.

In effect, Republicans handed $200 billion from families to corporations. (GOP aides said, however, that the situation was fluid and that they always had hoped to make the corporate rates permanent.)

On Nov. 16, the House passed the tax overhaul, 227 to 205.

Senate doubles down

The Senate would take the principle of Brady’s last-minute move and extend it further by making virtually all of the tax cuts for families and individuals sunset after 2025.

GOP leaders tried to explain this discrepancy by saying they needed to give businesses long-term assurances about the tax environment so they could invest and make plans, but it fed into allegations from Democrats that the package was meant for businesses and the wealthy, not the middle class.

“We had to thread the needle,” Senate Majority Leader Mitch McConnell (R-Ky.) said in an interview. “Why did we make it permanent for corporations? Because they have to make investment decisions.”

Senate Republicans had hoped to pass their tax cut bill on Nov. 30, but there was a last-minute­ insurrection led by Sen. Bob Corker (R-Tenn.), who was concerned about the impact of the bill on the federal deficit.

Corker’s queasiness forced GOP leaders to search elsewhere for assurances that they had the votes to pass it, and that led them into the expensive demands of Sen. Ron Johnson (R-Wis.).

Johnson wanted a significant expansion of “pass through” tax cuts that benefit business owners who pay their taxes through the individual code. Although he and others described the beneficiaries of the pass-through rate as primarily small businesses, nonpartisan tax experts say it mainly benefits the top 1 percent of earners.

Ultimately, Johnson managed to extract an additional $114 billion in tax cuts for these entities out of GOP leaders.

Meanwhile, Republican Sens. Marco Rubio (Fla.), Mike Lee (Utah) and Susan Collins (Maine) were pushing proposals that would expand a child tax credit for working families, offsetting the cost by slightly bumping up the corporate tax rate.

“You’re telling me that if we have a corporate tax rate that goes from 35 percent to 20.94 percent, that [will] hurt growth?” Rubio asked on the Senate floor. “Twenty percent is the most phenomenal thing we’ve ever done for growth, but if you add 0.94 percent to that, it’s a catastrophe? We’re going to lose thousands of jobs? Come on.”

His amendment was voted down 71 to 29, and the bill’s other tax changes were still alluring enough to attract Rubio’s, Lee’s and Collins’s support in the final vote. Only one Republican, Corker, voted against the measure, out of concern that it would drive up the deficit.

A complete picture

GOP leaders are now working to resolve differences between the House and Senate bills, but the broad contours have come into focus.

The legislation would lower taxes for many in the middle class, but mostly temporarily, and fall far short of the 35 percent cut for everyone in the middle class that Trump promised last year.

For example, the nonpartisan Tax Policy Center has estimated that in 2019, a household earning between $50,000 and $75,000 would save $780 a year if the Senate bill’s changes become law. This is essentially an 8.9 percent tax cut.

Beginning in 2023, households that bring in less than $30,000 would all average a tax increase, according to the nonpartisan Joint Committee on Taxation, Congress’s official scorekeepers. And by 2027, all income groups that earn less than $75,000 would see their taxes go up. That’s because although the bill allows all the individual tax code provisions to expire, it retains a less generous method of calculating inflation than are currently in use, which effectively pushes workers into higher tax bracket faster.

Larry Kudlow, who advised Trump during the 2016 campaign and is a big supporter of the tax cuts for businesses, said the changes for individuals and families amounted to a “mishmash.”

Asked if the tax package in aggregate would mean a middle-class tax cut, Edward Kleinbard, a former chief of staff for the Joint Committee on Taxation, said: “That’s delusional or dishonest to say. It’s factually untrue.”

He added, “The only group you can point to that wins year after year and wins in very large magnitude is the very highest incomes.”

White House officials defend the temporary nature of many of the tax cuts, saying they will inevitably be extended by a future president and Congress because they are politically popular. They also say the tax savings for middle-class families would be much larger than outsiders have suggested, particularly when factoring in an expansion of a tax credit for working families.

Still, on Wednesday, for the first time, Trump acknowledged that some Americans may not benefit from the tax package, and he said they would try to make last-minute changes. But he didn’t specify what they might be.

“There are very, very few people that aren’t benefiting by it, but there’s that tiny little sliver, and we’re going to try to take care of even that very small group of people that just through circumstances maybe don’t get the full benefit of what we’re doing,” he said at a meeting with his Cabinet. “But the middle class gets a tremendous benefit, and business, which is jobs, gets a tremendous benefit.”

Erica Werner and Paul Kane contributed to this report.

The Republican Senate Tax SCAM Bill

(THIS ARTICLE IS COURTESY OF THE NEW YORK TIMES)

 

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CreditMark Wilson/Getty Images

As more senators show signs of sacrificing their principles and embracing the Republican tax bill for minor and nebulous concessions, it bears looking more closely at the process that produced this terrible legislation and some of its lesser-known provisions.

The Senate tax bill, a 515-page mammoth, was introduced just last week, and the chamber could vote on it as soon as Thursday. This is not how lawmakers are supposed to pass enormous pieces of legislation. It took several years to put together the last serious tax bill, passed in 1986. Congress and the Reagan administration worked across party lines, produced numerous drafts, held many hearings and struck countless compromises. This time it’s not about true reform but about speed and bowling over the opposition in hopes of claiming a partisan victory. The country ought to be dismayed by the way senators like Bob Corker, Susan Collins and Ron Johnson appear to be backing away from their principled objections based on half-measures promised by President Trump and the majority leader, Mitch McConnell, that will not address its big flaws.

This rush to the Senate floor has been orchestrated by Mr. McConnell, following the same playbook he used in the failed effort to repeal the Affordable Care Act. The longer people have to study the details, the less likely the bill is to pass. People should know by now about the big stuff: the giant permanent corporate tax-rate cut, the small and temporary tax cuts for the middle class, the repeal of the A.C.A.’s individual mandate and the $1.4 trillion added to the federal deficit over 10 years. But other provisions are not as well understood and deserve to be called out. Here are three.

PICKPOCKETING THE MIDDLE CLASS: Like the House tax bill, the Senate measure would change how the government adjusts tax brackets and other tax provisions for inflation, replacing the Consumer Price Index with the chained Consumer Price Index, which tends to increase at a slower rate. While most taxpayers would not notice an immediate impact, the effects would compound over time as more low- and middle-income families are pushed into higher tax brackets, and as working families receive less help through benefits like the earned-income tax credit.

Over the next decade, changing the inflation measure would mean that families would lose $134 billion by paying more in taxes and receiving fewer benefits than they would under current law, according to Congress’s Joint Committee on Taxation. The increase will be even bigger in future years: $31.5 billion in 2027 alone.

Continue reading the main story

HIDDEN GOODIES FOR BUSINESS: While families would be hit with tax increases, corporations stand to reap even bigger tax cuts under certain conditions. That is because the bill contains a tax-cut provision that would automatically kick in if the government took in more money than its accountants are projecting right now. Businesses could pocket an extra $79 billion in 2027 because of that measure, according to the Center on Budget and Policy Priorities. Proponents of the tax cut might argue that the government should give back money if it collects more than it expected. But there’s still going to be a gigantic deficit, and — surprise, surprise — there are no similar givebacks for individuals.

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A BREAK FOR BOOZE: The Senate bill contains a special tax cut for makers of beer, wine and spirits, for no particular reason. (Perhaps it’s because these companies are doing their patriotic duty of keeping Americans in good cheer.) It would reduce levies on beer, wine and liquor produced in or imported into the country, and, while described as a boon for “craft beverage,” it would benefit the entire industry, saving it about $4.2 billion over 10 years. This is particularly galling because taxes on alcohol have not increased since 1991 and are calculated without an inflation adjustment, which means they have already shrunk substantially over time.

These policy changes, smuggled into the bill to please big Republican donors, would never survive a more transparent process. History will remember them for what they are: smaller scams aimed at winning support for a much bigger one.

GOP tax plan would provide major gains for richest 1 percent

(THIS ARTICLE IS COURTESY OF THE WASHINGTON POST)

 

GOP tax plan would provide major gains for richest 1 percent and uneven benefits for the middle class, report says

 September 29 at 2:03 PM
The analysis by the Tax Policy Center, a leading group of nonpartisan tax analysts, challenges President Trump’s promise about the effects of the plan.The top 1 percent would see their taxes drop by more than $200,000 on average, the analysis found.

But nearly 30 percent of taxpayers with incomes between $50,000 and $150,000 would see a tax increase within a decade — despite Republican promises that the plan is designed to provide relief to middle-class Americans, according to the study.

The majority of those making between $150,000 and $300,000 would also be hit with higher taxes.
This is a developing story. It will be updated.

This Trump real estate deal looks awfully like criminal tax fraud  

(THIS ARTICLE IS COURTESY OF THE WASHINGTON POST)

 

Outlook

This Trump real estate deal looks awfully like criminal tax fraud

Two tax lawyers break down the president’s sale of two condos to his son.

Trump says American people ‘don’t care at all’ about his tax returns
Speaking at his first news conference since winning the presidential election, Donald Trump defended his decision not to release his tax returns, saying the American people “don’t care at all.” (The Washington Post)

 August 4  

About the authors

President Trump clearly doesn’t want to release his income tax returns to the public. Members of the public and commentators have progressed through stages of outragespeculation and acceptance that they’ll never see the goods, while others have made attempts to pry the documents free (such as proposed legislation in New York and other states that would require presidential candidates to release their returns). But Trump’s most pressing tax problem may come from somewhere else entirely: a pre-election transfer of property to a company controlled by his son that could run afoul of the IRS.

According to a recent story by ProPublica and the Real Deal, in April 2016, a limited liability company managed by Trump sold two condominium apartments to a limited liability company managed by Eric Trump. They were on the 13th and 14th floors of a 14-story, full-service, doorman building at 100 Central Park South in Manhattan. This is a prime Midtown neighborhood, yet the sale price for each condo was just $350,000. Although the condition and square footage of apartments 13G and 14G are not readily known, a popular real estate website shows that G-line apartments on both the fifth and eighth floors are one-bedroom, one-bath units of just over 500 square feet. Two years before the Trump transaction, apartment 5G sold for $690,000. Maybe the two units in question were in terrible shape, but two months before the sale to Eric Trump’s LLC, they were advertised for $790,000 (on the 13th floor) and $800,000 (on the 14th floor), according to ProPublica.

If a sale between a parent and child is for fair market value, it does not trigger a gift tax. But if a parent sells two expensive condominiums to his son at a highly discounted price, for example, then the parent makes a taxable gift in part. In that case, the seller must pay a gift tax of up to 40 percent. (In this case, that might have run the president somewhere in the neighborhood of $350,000.)

Each taxpayer has a $5.49 million lifetime exemption (a married couple has a combined $10.98 million exemption), meaning you can give away that much money without incurring the tax. To claim that a transaction is covered by the exemption, though, you must file a gift tax return. Well-advised wealthy individuals typically fully use their $5.49 million exemption by making gifts to family members as soon as they have the assets to do so.

Trump scolds protesters demanding his tax returns
President Trump on April 16 issued two tweets in which he criticized protesters who marched the day before to demand that he release his tax returns. (Video: Bastien Inzaurralde/Photo: Jabin Botsford/The Washington Post)

So if Donald Trump sold the apartments to his son’s company for less than fair market value, he needed to file a gift tax return, even if he wanted to claim that the sale was not taxable because of the exemption. The government wants to know what gifts people make, because gifts are taken into account when determining the value of a person’s taxable estate at death. If Trump had already used his exemption, he would owe gift tax on the difference between the fair market value of the apartments and the amount paid by Eric Trump.

It’s possible the president filed the right paperwork. But without a full release of his tax returns, the available evidence suggests he hasn’t. According to New York City property records, Trump paid $13,000 in state and local transfer taxes for these two sales. That is the correct amount for a sale between strangers. But if he paid state and local transfer taxes, that means he didn’t treat the transfers as gifts. And on the real estate forms filed in New York, Trump didn’t check any of the boxes indicating that these were sales between relatives or sales of less than the entire property. It would seem, then, that he treated the transactions as if they were sales for fair market value to a stranger.

Since Trump did not cast the transactions as gifts for state and local tax purposes, it is almost certain that he did not do so for federal gift tax purposes, either. In our combined 40 years of experience as tax lawyers, we are unaware of a situation in which a taxpayer would report a transaction as a fair market value between strangers on the state level (and thus incur real estate taxes) but treat it as a gift at the federal level (and thus incur an additional tax). It’s fair to infer that Trump didn’t follow the rules.

Willful failure to file a tax return, including a gift tax return, is a misdemeanor , punishable by a $25,000 fine, imprisonment of up to one year or both. Fraudulent failure to file — meaning an overt act of evasion — may elevate willful failure to a felony . That carries a fine of up to $100,000, imprisonment of up to five years or both, along with the costs of prosecution. According to internal guidance provided by the IRS to its agents, factors indicating potential fraud include repeated contacts by the IRS, failure to cooperate with IRS agents or employees, knowledge of the filing requirements, offering implausible or inconsistent explanations, substantial tax liability, and refusal or inability to explain failure to file.

Presidential income tax returns are subject to mandatory audit . The IRS can decide whether Trump’s transfers were truly gifts. If they were, which seems likely, Trump’s failure to file a gift tax return opens him up to penalties and fines, or even criminal charges. Perhaps such a charge wouldn’t go anywhere, since the president must consent to being indicted by a federal prosecutor. But tax law would permit them.

Trump says American people ‘don’t care at all’ about his tax returns
Speaking at his first news conference since winning the presidential election, Donald Trump defended his decision not to release his tax returns, saying the American people “don’t care at all.” (The Washington Post)

Twitter: @professortax
@ProfBCrawford

Saudi Arabia’s Finance Minister Says That Citizens And Companies Will Pay No Income Tax

 

(THIS ARTICLE IS COURTESY OF REUTERS)

 

Saudi Arabia’s finance minister said on Sunday that citizens would not pay taxes on income and Saudi companies would not see their profits taxed under sweeping economic reforms being introduced in the oil-rich kingdom.

The collapse in oil prices after mid-2014 has pushed Saudi Arabia to contemplate a radical overhaul of all parts of its economy, including new taxes, privatizations, a changed investment strategy and sharp cuts in government spending.

Mohammed al-Jadaan sought in a statement carried by state news agency SPA to allay concern that people would be taxed as part of the ambitious reform plan. Saudis currently do not pay any income tax, nor are Saudi companies taxed on their profits.

He also said a value-added tax planned for 2018 would “not be raised above 5 percent before 2020”.

The six Arab monarchies of the Gulf Cooperation Council are aiming to introduce a 5 percent value-added tax at the start of next year to raise non-oil revenues. But economists and officials in some countries have said privately that simultaneous introduction in all countries may not be feasible.

That is because of the complexity of creating the administrative infrastructure to collect the tax and the difficulty of training companies to comply with it in a region where taxation is minimal.

(Reporting by Mostafa Hashem; Writing by Tom Finn; Editing by Hugh Lawson)

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