I’ve been conversing with people who mention these points and I thought I’d write a quick diary to unpack some of it, so I can point people here.
Trump has years in which he pays $0 income tax. Good on him, right? I mean, boy don’t you wish you didn’t owe any income tax! Someone will say something like I saw recently:
Every single person in the US tries to pay as little taxes as possible. Common sense.
You know what, you’re right. I’ll throw in another one: Trump has a responsibility to shareholders and other stakeholders in his business to be as profitable as possible. If he can make a product with cheaper labor overseas, all other factors equal, and sell it for the same price and a greater profit here in the U.S., that’s a sound business decision, and as a businessman, no one faults him for it.
So why do we bring these points up? Why do we care?
1.) Not everyone takes all those deductions. I usually don’t, for instance. Partly, it wouldn’t matter; I don’t often make enough or have enough other material deductions that claiming my charitable giving would be better for me than the standard deduction anyway. But I also don’t particularly feel the need to be financially rewarded for supporting the causes I believe in. If I owed millions in taxes, it might be a useful incentive to give more — this analysis of the Tax Reform Act of 1986 suggests that on the whole, it’s not that important, although the effects on giving by the 1% might be noticeable (money sentences: “the effects of tax law changes on overall contributions are not noticeable for the aggregate cross-section data with all itemizing taxpayers grouped together,” and “mean and median contributions by the top 1% of itemizers… did not decline over the period, [but] as a percentage of income… median contributions fell from 1.9 to 1.1 percent of income.”)
2.) Even if I did take all my deductions, though, it wouldn’t be a drop in the bucket of my state budget or the federal budget. For a man like Trump, who would owe millions and possibly billions over the course of decades in business, the effect on state budgets at least is noticeable. If someone like him pays $0 in taxes, that means he is using the roads, the defense of our military, the national parks, and all the other resources of this country completely for free… at our expense.
3.) People want to buy things cheap. Just as Trump’s business can find cheaper labor overseas, I respect that there are consumers on tight budgets who need to buy cheap good and services. I’m lucky to be decently middle-class and have the luxury of taking other factors into account: I try to buy American, local, and union when possible. I avoid some low-priced national chain stores over labor issues and even a particular local company which has had wage theft problems.
Similarly for the businessman, there are reasons other than labor costs to keep your operations here at home: all other factors being equal is one thing, but all other factors are never equal. There is a moral duty not to contribute to the exploitation of low-wage foreign workers, the environmental benefits of less shipping, and your business’ reputation among consumers who prefer American products made with high labor standards, among others. All of these except the last are things that don’t hit a short-term profit and loss statement, though, which suggests that a businessman who doesn’t take them into account cares less about those things than about profit.
4.) One more reason to make goods in America is to hire and employ Americans. Patriotism is not a legal requirement and is often a suspect emotion, but wanting to contribute to the well-being of your community through both workers and consumers is a good, solid human motivation. (Small businesses don’t usually have the choice on that, which is why supporting them is a big part of strengthening communities.) But while patriotism isn’t and shouldn’t be legally required, and you can’t legislate being a good citizen of a community, they’re something we can reasonably expect of someone running for President.
5.) Lastly, about that $0 tax liability. Even if I took every deduction I’m definitely entitled to and a few for which I can make a sleazy argument, my taxes would never be $0. There just aren’t enough deductions in the tax code that I have the opportunity to use. The ability of a profitable businessman like Trump, apparently rich and getting richer every year, to take an income many times the size of mine and whittle it down to a $0 tax liability just points out the immense loopholes that the rich have carved for themselves in the American tax code. That this is even possible for a “smart businessman” to do (really just someone able to afford good tax lawyers) is a photograph of the inequity in our tax system.
You and I may argue about what the fair share of the rich ought to be in our tax code, but I bet you we can both agree that it sure ought to be more than $0. One of the two candidates for President this year has a tax plan to keep that from happening so often. Here it is: https://www.hillaryclinton.com/issues/a-fair-tax-system/.