That would make sense if we taxed wealth and not income. We don’t - you generally have to realize income for it to be taxed - likewise, you generally need to realize a loss to get a write off. Your net worth going up and down - heck, I have a few hundred thousand in untaxed unrealized capital gains. I’ll pay taxes on it eventually, unless the market crashes and by the time I sell its worthless.
In general, bankruptcy is not without stigma although it is accepted that businesses can fail and go bankrupt, and even individuals can go bankrupt for reasons that may not be entirely their own fault. For individuals, the biggest drawback is difficulty getting credit, especially a home mortgage, for several years. However, bankruptcy as a deliberate business strategy and as a way of screwing other people is frowned upon as despicable, even if the process stays within the law.
Yes, you do - in the form of property taxes, which a real estate guy like Trump must be keenly aware of.
Well, it was kind of the same thing but different. Let’s be factual. The tax form that Shodan linked to showed that the Clinton’s declared a capital loss on line 15 of Schedule D. A capital loss may be used only to offset capital gains in the year the loss occurred, and also be carried over into subsequent years, with the exception of a limit of $3000 allowed to offset ordinary income. This is similar to Trump’s situation in that there was a loss that could be carried forward, but it was a realized capital investment loss rather than an operating loss. The capital investment loss did not permit the Clintons to pay zero taxes that year, or in any other year. In fact, that year’s return showed that they paid $3.5 million in taxes. The net result is that to all appearances, the Clinton’s obeyed applicable tax laws in 2015 and Trump did the same in 1995.
Note that the Clintons voluntarily released their entire return, which is how we are able to know this.
Yes, but that’s almost completely separate from your federal and state income tax - except you get to write off the property taxes. (There are other examples of “wealth tax” - like the tabs on your car or licensing a boat)
It is more than just a paper loss. They paid real money for something that lost value. For accounting purposes they had to record the loss, and chose to do so in a single year, although the loss in reality occurred over several years. What they have in tangible assets is a red herring.
Here’s a better example, because the dollar amounts are objectively set by the market rather than an accounting firm doing a valuation, and the timing is set by legally defined events instead of timing it for accounting purposes. You buy 10,000 shares of Fannie Mae stock in 2007. This would cost you about $670,000. Today that stock is worth $17,100. You have a “paper loss” of over $650K. But calling it a paper loss is really misleading. You spent $650K that you will never see again. It’s real money and it’s gone. The only thing that makes it a paper loss is that you haven’t sold it yet. When you sell it, it becomes a realized capital investment loss, and that’s when it shows up on your tax return. People say “paper loss” as if it doesn’t really matter.
“Writing off” the property tax doesn’t mean you don’t have to pay it. It means that your taxable income is reduced by what you paid in property tax. If you pay $1 million in property tax, it will reduce your federal taxes by $396,000 (at most)–which is a great benefit, don’t get me wrong–but not by $1M.
Unless you die before selling it, then it passes to your heirs, and they take the current value as their cost basis, so tax will never have been paid on all the gains you’ve seen so far.
This is a big loophole in our inheritance tax system that needs to be fixed. Hilary, to her credit, has identified it as something she wants to fix.
Given your politics, it would have been better to make it clear with a smilie that you were joking. Poe’s Law and all.
There’s no argument so absurd that I haven’t seen someone try to make it on the board in all apparent seriousness.
I’m not going to speak for the Great Debates mods, but in my opinion you should make it clear that this is a hypothetical argument that it would be possible for someone to make, rather than something you believe.
“Success” is also the American way.
Try, try and try again is fine for learning to hit a fastball in little league. To a certain extent it’s accepted in the Silicon Valley tech startup world as VCs try to pick the next billion dollar company.
As I understand it, Trump mostly lost a billion on casinos (a business that figuratively prints money), and paying to much for some real estate and airplanes for his defunct Trump Airlines (valuating buildings and airplanes is not exactly rocket science).
So basically what you have is the “World’s Greatest Businessman” and “Master of the Deal” making a bunch of really crappy deals to the tune of a $1 billion loss. He then took advantage of the tax laws to write off those losses and not pay taxes for the next 18 years. Furthermore, rather than be upfront about this, he has purposely refused to release his tax records, something that every presidential candidate has done for 30+ years. Furthermore, rather than take the opportunity to explain all this, his position at the debates was “that makes me smart”.
Yes, everything may have been perfectly legal and accepted business practices. But the optic are terrible if you are spinning a narrative of being the “Master of the Deal” who can “fix the broken and corrupt system run by idiots”.
Taken with Trump’s public behavior, it paints a picture of an arrogant blowhard who made a bunch of shitty business deals, who is as much a part of the corrupt system as anyone (if not more) and tried to gloss it over hoping no one would notice.
It begs the question, what exactly is there to Trump, other than a lot of swagger and braggadocio? And at what point is someone no longer"working a corrupt system" and is a contributing part of it?
All these big companies, they just write off everything!
Of course. Its written off against your income, not against your taxes. That’s the common use of the term “write off” - if its against your taxes, we usually use the words “tax credit.” :rolleyes:
Keep in mind there are two issues being discussed here:
- Rolling over legitimate losses from one year to the next.
- Creating phantom losses through a questionably legal shell game of moving money around corporations, partnerships, and other business entities, both foreign and domestic.
#1 is fine. If you really bought something and then sold it later for a loss, it’s fair to be able to amortize the losses over several years.
#2 is what the super rich can do with a team of accountants and lawyers to avoid paying taxes.
These kind of tax issues are complicated. People are getting riled up discussing point #1, but in the meantime the super-rich are laughing at us plebes because they can avoid all tax anyway with #2.
Oh, the other thing…
Property taxes and sales taxes are local level taxes - they do nothing to support troops overseas, or fund the CDC or make sure your food is safe.
Yep, if I die before I spend it, I think my kids should need to pay the taxes on it.
I’m more divided on the cost basis when I give it to a charity.
Well, you know that and I know that but a lot of people don’t understand the difference. Witness the many who think they should take on mortgage debt just because “they need the deduction.”
That’s both an old trope and one of the arguments used during the housing bubble. Where it’s true is if you have a choice between renting and buying: you can’t write off any of your rent whereas you can get a tax break for your mortgage.
But you’re still out the money either way; it doesn’t make you money and only saves you a modest amount of net taxes due in the end.
What’s the point of a board called “Great Debates” if there is no debate?
Is it to have an echo chamber? Or is to explore different points of view?
We’re not so desperate for debate topics that you need to propose one that you yourself admitted was “farcical.”
I have been using those same phrases and underlying thoughts for over 30 years to justify why I think wealthy people should pay a higher percentage of their income to taxes: the wealthy use more of the government and have a much larger need for government than any other class of people.
Thank you for offering evidence that I am not alone in thinking this, nor in how I reached that conclusion.
And the wealthy pay more, on average, do they not? I know as my family’s income goes up we pay more in overall taxes each year even though we get a few deductions. Furthermore, the poor still have the opportunity to benefit from the highways, court systems, military protection by using those benefits to help their production correct?
In my opinion, I think it’s important for each citizen to contribute a reasonable amount of time to making sure society works.