Monday, October 3, 2016

Rudy Giuliani Should Not Do Securities Law

Meet the Press hosted the adulterous racist lying former mayor of my city. Rudy Giuliani’s task was to defend Trump’s 1995 tax return:
Yeah. I'm the right person to level this charge, because I've never made such a charge, and I've prosecuted people who've committed rape.
He had already tossed out the name of Juanita Broaddrick but no prosecutor should ever bring charges based on false smears posted on right wing websites especially when the alleged victim declared no rape ever occurred. But I digressed into territory unrelated to the tax issue. Rudy did tell Chuck Todd:
And I think your bringing up my personal life really is kind of irrelevant to what Hillary Clinton did.
Of course Rudy does not want to talk about how he has cheated on his former wives but there is zero evidence that Mrs. Clinton ever cheated on Bill. So let’s turn to the issue of the day by noting this from Chuck Todd:
Today's New York Times has a front-page exposé that Trump declared a loss of $916 million on his 1995 tax return, which means it could have allowed him to avoid paying federal income taxes on nearly a billion dollars' worth of income over an 18-year period, all legal, by the way. The losses came from mismanagement of three casinos, his airline, and the Plaza Hotel in New York. The Times received the 1995 documents in the mail anonymously with a return address of Trump Tower. And his former accountant, who's now retired, verified them.
Was it “all legal”? John Hempton challenges this claim:
Donald Trump did not repay all the debt associated with those investments. Either the loss is a real loss and the Donald was really was out of pocket by $916 million (in which case he has legitimate NOLs) or the loss was passed on to someone else by The Donald defaulting on debt - in which case Donald Trump should be assessed for income from debt forgiveness. After all if the debt is forgiven it is not Donald Trump's loss. The loss is borne by the person who lent Donald money and did not get it back. That - clearly stated by example - is why most income tax systems assess debt forgiveness as income.
He goes onto explain a scheme called “debt parking”. If this is not illegal, it certainly should be. But let’s return to Rudy:
And then somewhere around paragraph 18 they point out there was no wrongdoing. Now, people have a hard time understanding how taxes work. If Donald Trump hadn't taken those losses, he could have been sued by his investors. He could have been sued by his business partners..I mean the reality is he's a genius.
Debt parking strikes me as wrongdoing but genius? This scheme is child’s play compared to what U.S. multinationals like Apple and Google pull off. Not only do they have to play games with transfer pricing but they also have to figure out how to avoid that repatriation tax. Now that’s genius but are we going to say Base Erosion and Profit Shifting is all “perfectly legal”? Even if one did, this notion that Trump’s shareholders could sue if he did not dodge taxes is wrong on so many levels. First of all – this was a personal tax return not the return of a corporation. Secondly, a lot of corporations do not engage in blatant income shifting and they will not be sued if they fulfill their obligations under FIN 48. What gets CEOs and CFOs sued is using dodgy tax gimmicks and not letting shareholders know that their low effective tax rate is at risk.


Anonymous said...

right, don't let them know the truth, drive up the price of the stocks and profit from that

ProGrowthLiberal said...

Anonymous - exactly! This reminds me of the Arthur Andersen scheme for Halliburton engineered by CEO Dick Cheney. Change the accounting system but not let people know it was changed. On one Meet the Press Russert asked Cheney about this to which he quipped it increased revenue by only 1%. Of course going from a 2% profit/sales ratio to a 3% profit/sales ratio inflates reported profits by 50%. Of course Russert was too stupid to realize Cheney had just conned him.

Anonymous said...

If it's legal, then it's legal.
Quit bitching unless you want to also bitch about Cankles selling access to the federal gov't for over a billion dollars. Ok? said...

We can still bitch about Trump not releasing any of his returns, in total contrast to every prez candidate in the last 40 years, including Richard Nixon who was being audited during Watergate, being audited being at least in the past Trump's official excuse why he was not releasing his returns, although there are plenty of years not being audited, and for that matter, the IRS has never confirmed that he even is being audited, although he probably is, given the scammy stuff he clearly pulls.

Of course, we already figured he was probably paying no or little taxes, irrespective of which loophole he was using, and he has in the past essentially admitted this, noting that there are lots of "tax breaks" for large scale real estate developers. The much more serious matter (and his lack of charitable giving is also known and small potatoes, although he may actually be touchy about not being worth as much as he claims), is who is in hock to abroad and by how much. We know that the list includes the Bank of China, Deutsche Bank, and a bunch of gangster Russian oligarchs tied to Putin. That stuff is probably the really ugly dirt he does not want seen.

Tom aka Rusty said...

Politicians and journalists who do not understand that net income/loss and net worth are two different concepts probably should not comment on tax stories.

ProGrowthLiberal said...

Rusty defends tax evasion on the grounds that some journalist does not understand tax law? BNA put up a story today where several tax lawyers have suggested Trump has been debt parking which is indeed illegal. I guess these tax lawyers are just bitching. Of course Trump could release his other tax returns so we could get a clearer picture.

ProGrowthLiberal said...

Dan Shaviro understands the tax code and he has weighed in:

justsomeguy05 said...

When Reagan developed dementia, his wife kept him out of public view. Same is currently true for Denver Broncos owner Pat Bowlen. Why isn't somebody keeping Rudy Giuliani away from any microphones ??

Don Coffin said...

For another take on the legitimacy (or not) of Trump's tax filing: