Today’s Tax Notesreports[fn1] that the IRS has announced that it will not release pretty much any new formal guidance (including revenue rulings and revenue procedures) for the foreseeable future.[fn2]
A week and a half ago, David entered the debate about Trump’s potential problem with the Emoluments Clause. He pointed out that, whether or not Trump’s business interests would run afoul of the Emoluments Clause, any divestiture of assets would probably trigger a significant tax liability. (We don’t know exactly what that would be, but given that many of his assets are real property interests, he has probably been depreciating them, so even if they haven’t appreciated in value, his adjusted basis is probably significantly lower than the fair market value of the assets. So when he sells them, the sale will probably trigger a significant taxable gain.) Continue reading “Trump’s Emoluments Tax Problem, Part Two”→
Republicans on Capitol Hill are reportedly planning to use the filibuster-proof budget reconciliation process to repeal the Affordable Care Act and overhaul the tax code. Against that background, Sam Wice says that “the most powerful person in America” in 2017 will be Senate Parliamentarian Elizabeth MacDonough, the nonpartisan official who will “determine” how much of their agenda Republicans can pass through reconciliation. This, of course, is an exaggeration: like it or not, the most powerful person in America in 2017 will be Donald J. Trump, who will wield all the power of the imperial presidency. But Wice’s post helpfully directs our attention to the budget reconciliation process, the rules of which quite likely will determine whether the Republican leadership on Capitol Hill can repeal the ACA and reform the tax laws.
Yet while one should not underestimate the importance of reconciliation, one should also not overestimate the power of the Parliamentarian in the reconciliation process. As a formal matter, the Parliamentarian’s role is advisory; and as a practical matter, the Parliamentarian has little say over significant aspects of reconciliation. Other actors—most notably, Senate Budget Committee Chairman Mike Enzi (R-Wy.)—wield at least as much influence as the Parliamentarian. Most importantly, Enzi—not MacDonough—will determine whether the provisions in any reconciliation bill violate various rules against deficit-increasing legislation being passed via reconciliation. And unlike the Parliamentarian, the Budget Committee Chairman is very hard to fire.
Reconciliation measures can begin in either or both chambers. However, since the ultimate vote on the budget measure occurs in the Senate, we’ll focus on the Senate side of the reconciliation process for purposes of this discussion. On the House side, the Rules Committee Chair and the Budget Committee Chair will wield outsized influence as well. We expect Pete Sessions (R-Tex.) to stay on as House Rules Committee Chair; as for the House Budget Committee Chair, the race is on for a replacement to Tom Price, the Georgia Republican recently tapped as Trump’s Health and Human Services Secretary.
At this point, it’s pretty clear that the norm of presidential candidates (and, presumably, presidents) releasing their tax returns to the public is dead and buried. Sure, it’s been on life support for some time now (I mean, a significant number of candidates in this race released weak disclosures at best), but Trump’s election without having ever released his returns clearly demonstrates that flouting this particular norm is not a bar to election.
On election day I wrote that Congress should require disclosure from presidential candidates (and, at this point, I would expand that to sitting presidents and vice-presidents), and provided a handful of ideas about how such legislation should look. But my previous post suffers from one significant weakness: I assumed that disclosure was a good thing, without explaining why. Continue reading “Revisiting Presidential Tax Return Disclosure”→
When a businessperson who runs many active businesses runs and wins for President, clearly there would be many second order problems associated with inherent conflicts between running corporations and the country. When President-elect Trump won the office, many of these conflicts have bubbled to the surface.
For example, to avoid a conflict of interest between benefiting one’s personal holdings and the Country’s best interests, assets of the President are placed in a blind trust. As many have pointed out, this works only when the President does not know the nature of the holdings. Putting existing businesses into a blind trust does not stop the President for knowing the underlying assets of the trust. The conflict is not ameliorated by trust structure. Nor, by the way, would it be fixed if President elect Trump divests but the family continues to own the assets.
For this post, I want to consider the current discussion related to the blind trust problem called emolument. Many prior to the election probably have not heard much about the idea of emolument. Larry Tribe and others believe that President elect Trump’s ownership of active business assets, even in a blind trust, would violate, Article I, Section 9, Clause 8 of the Constitution which prevents the President from accepting “presents” or “Emolument” from foreign states. Others, like Andy Grewal, do not believe that mere ownership of assets triggers the Emolument Clause.
If the solution to the blind trust and Emolument Clause problems is a divesture of President elect Trump’s assets as many advocate, this would trigger (to borrow a catch phrase of President elect Trump’s) huuuuuuge tax problem.
Today Pulitzer Prize winning journalist, David Cay Johnston, Phil Hackney, and I got together for a 30 minute podcast discussion regarding the recent NY Times follow-up article about Mr. Trump’s $916 million tax loss (“NOL”).
Here is link if you missed hyper-link above: http://share.sparemin.com/recording-5131
The topics ranged from the current tax reporting regarding Mr. Trump’s 1990s tax returns to the Trump Foundation to potential criminal sanctions against Mr. Trump. It was fantastic to be a part of and I hope everyone listens.
Much attention is being paid to how Donald Trump could have amassed a $900 million NOL in the mid 90s. I remain laser-focused on the Donald J. Trump Foundation. For this blog post I ask the question: could Mr. Trump’s misuse of the private foundation that he leads result in criminal sanctions under tax law?
I think there is enough evidence to open a criminal investigation into his activities. Nevertheless, a criminal prosecution is highly unlikely for both political reasons and issues of proof (ignorance of the law is a defense). Still, I think the IRS has a duty to open an investigation under the egregious set of facts I lay out.
Here is the important thing to keep in mind as you consider the arguments I lay out in this post: Donald Trump does not own the Foundation and its property does not belong to him. It does not matter from whom the money came. He is the president of a nonprofit organization that is entrusted with money to be used for charitable purposes that benefit the public.Continue reading “Trump’s Abuse of Trump Foundation — Criminal Tax Implications?”→
The New York Timesreported tonight that in 1995, Republican presidential candidate Donald Trump may have claimed a $916 loss, a loss substantial enough that it could have allowed him to avoid paying taxes for nearly two decades.
The push notification for the story showed up on my phone at 8:30 pm Central time on a Saturday, so I haven’t had time to really dig into it. I’m sure that, over the next few days, we’ll have something more substantive to say. But in the meantime, a couple thoughts: Continue reading “A $916 Million Loss? #TrumpLeaks”→
In anticipation of tonight’s debate, I’m going to describe what both candidates propose to do with tax rates, provide a little commentary, and suggest a couple questions that the moderator might ask to clarify what the candidates plan on doing.
Nearly two months ago, guesting on Prawfsblawg, I wrote about the state of the presidential candidates’ disclosure of their tax returns. Since then, they’ve gone through several more primaries, and we have a better idea of where each candidate stands in the electorate. So, as the semester winds up and my focus shifts to grading, I thought I’d warm up by grading the candidates on their level of tax disclosure.
A caveat before we begin: as tax historian Joseph Thorndike has noted (here and 150 Tax Notes 591 (2016)), while there’s a strong norm for candidates’ releasing their tax returns (consistently since 1980, and sporadically for at least a decade before that), they are under no legal obligation to do so. If we really care about seeing candidates’ tax returns, we should encourage Congress to make disclosure mandatory.