Leona Helmsley was a wealthy hotelier, back in the 1980s. In discussing herself and her husband, she once famously said, “We don’t pay taxes; on the little people pay taxes.” Leona was ultimately sentenced to 16 years in prison for federal income tax evasion. And, as you may already know, Al Capone, guilty of every organized crime known to man (bootlegging, prostitution, racketeering, murder, etc.) was ultimately only charged and sentenced for one thing… income tax evasion… which landed him in prison for the rest of his life.
More recently, like a few months ago, I was staring at a math formula that I needed to plug into a spreadsheet. I needed the formula in terms of x, but unfortunately, x was an exponent in an expression that was under a square-root sign, and all of that was the numerator in a bigger expression. After staring at it for a minute, I asked my son, who was sitting nearby, if it he could figure it out… and he promptly did.
In hindsight, perhaps I could’ve paid him a consulting fee. What was that worth? Well, like the old joke… from the old “50 cents to push the button, and $999.50 to know which button to push” school-of-thought, $20 wouldn’t have been out of place. Even $100, since I needed it right away.
Wait… maybe I need a mathematician on payroll… I could hire him as a consultant on a monthly retainer. $1,000 a month? How about $10,000, because now I’m thinking tax benefits. How about $500,000,000 a year, and I get to deduct chunks of it for the rest of my life… and since I’m not paying him all of it, it’s of no tax consequence to him. And for me… some fancy accounting showing the liability due, and then claiming the annual credit of $10,000,000 – wow, I’ll never pay taxes again!!
Welcome to the slippery slope of how tax avoidance (totally legal) slides into tax evasion (totally not).
Setting aside the cushy job she got in her daddy’s organization, Ivanka Trump was paid an extra $750,000 in consulting fees. Giving your kids money is no crime. Claiming it as a business expense, however, is quite a different story. What’s slowly coming to light is how many tens of millions of dollars Donald Trump “consulted“ away… when actually, he was just keeping money in the family, but paying no tax on it.
As per emerging facts imply, as bad a businessman as Donald Trump may be, there’s still income from his numerous properties. The ones he didn’t already bankrupt (how do you bankrupt a casino) do generate some sort of revenue. That they’ve all lost money year after year probably means he doesn’t run them too efficiently… and whatever they do make is outweighed by the generous deductions he claims. Again, they either genuinely lose millions of dollars a year of his father’s hard-earned money that he’s slowly squandering… or, they make a bit, and he “cleanly” hides the profits.
As per above, you don’t mess around with the IRS. Around here, the CRA. Same thing… they want their cut, and they’re not happy when you try to hide it, or dance around it. They understand you’re allowed to pay as little tax as possible, as long as it’s legal… but there’s a line, and sometimes, its crossing is just way too blatant.
If Donald Trump doesn’t get re-elected, among the long list of lawsuits he’ll be slammed with… is likely to be the IRS, seeking what they feel is owed to them. Whether it’s criminal tax evasion, or a simple slashing of a bunch of bullshit deductions ($70,000 a year for hair care?)… remains to be seen. Taxes owed, interest, penalties… on top of the hundreds of millions of dollars of loans he has to repay in the not-too-distant future… to be clear, Donald Trump can’t ride off into the sunset, even if he wants to. He desperately needs the four years of presidential immunity that comes with the job.