(CNN)Donald Trump cares about debt -- he has lots of it -- and taxes -- he likely pays little of them. Inspired by the revelation that Trump"s presidential campaign, in its first major television ad buy (?!), just this week, touted a tax plan other than Trump"s own -- leaving out the part where he allows continued deductions for interest on debt -- I thought it would be fun to lay out some dots.
Trump is famously refusing to release his tax returns, claiming he is under audit (which ought to be irrelevant.)
Trump has stated that he tries very hard to pay as little tax as possible.
As a tax professional, I know that an issue on audit could well be the allocation of interest expenses. Under current tax laws, the interest on personal loans is not deductible, other than limited deductions for home mortgages and home equity loans, around $1 million of borrowing. Interest from business loans is deductible, now and under Trump"s plan. Again, Trump borrowed at least $160 million last year. If he borrowed this for personal reasons -- including to finance a presidential election run (which would be nondeductible) -- he should not be deducting the interest. Trump may be claiming the loans are business ones, and the IRS may be challenging that fact. If the IRS were correct, Trump could be using an interest tax break to get all taxpayers to help finance his campaign. This is speculative, of course, but we cannot know for sure if Trump"s tax plans are directly relevant to his own situation ... until and unless we see his tax returns.
To summarize, we know that wealthy people can use borrowing plus interest deductions to pay little or no taxes while living large; that Trump is a major borrower, including of at least $160 million last year alone; that Trump showed interest (small pun intended) in few details of his tax plan other than the child care deduction and the continued interest deductibility for business loans; that Trump"s child care deduction would hugely benefit wealthy working parents like Ivanka; that Trump"s ultimate tax plan diverges from the Republican trickle-down tax policy du jour, mainly in its continued deduction for business loan interest; that this deviation alone has a whopping $1.2 trillion dollar budgetary cost; that his campaign seems not generally aware of this fact about Trump"s own tax plan; that Trump"s disclosed tax returns from decades past show little or no tax; and that Trump claims to be under autit now and won"t release his tax returns.
These facts strongly suggest an impulsive leader who never strays too far from his personal self-interest in making public policy decisions, who personally likes debt and uses it aggressively and hates paying taxes himself. Whatever else one thinks of Hillary Clinton, there is no doubt that her own taxes would rise under her own tax plan. Not so for The Donald.
Read more: http://www.cnn.com/2016/09/02/opinions/trump-king-of-debt-but-not-taxes-opinion-mccaffery/index.html
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