Paul L. Caron
Dean




Saturday, July 10, 2021

Buchanan: TrumpWorld v. Those Pesky, Pesky Tax Laws

Following up on my previous posts (links below):  Neil Buchanan (Florida; Google Scholar), TrumpWorld v. Those Pesky, Pesky Tax Laws:

Last week, the Manhattan DA's office (working with the New York State Attorney General's office) charged various entities in TrumpWorld with a large number of felonies, and surely there are more to come.  Some of the charged crimes involve tax fraud, which is directly in my academic remit (as the Brits say).  The contours of Donald Trump's response -- not exactly a "defense," at least in any legal sense of that word -- are now becoming clear, and they are unsurprisingly absurd.

I will begin here with an overarching nontax issue relevant to the indictments, with the remainder of the column devoted to tax matters.  Bottom line: the charged crimes are serious, the crimes themselves are in no way sophisticated or borderline cases, and pursuing these charges is essential to the rule of law.

The loudest nontax-related argument coming from Trump, his adult children, and his other enablers is that this prosecution is a politically motivated abuse of the legal system.  References to "banana republics" fill the air of the right-wing mediaverse, and even some left-leaning commentators have offered responses like this: "If the parties' roles were reversed, wouldn't we at least stop to wonder whether there was something purely partisan afoot?"  That instinctive response by liberals is a laudable one, but (as pretty much all of them quickly acknowledged), other than motivating a "to be fair" aside, Trump's Banana Response is an empty talking point. ...

the New York indictment does not attempt to nail someone for making an honest mistake or for a one-time violation of a vague tax provision. The prosecutors lay out an elaborate, fifteen-year-long scheme by which Trump's employees were provided taxable benefits on which they did not pay taxes (even as the business deducted those expenses). This is a planned set of criminal acts, by which people avoided paying millions of dollars in taxes.

At this point, those among Trump's supporters who would previously have picked up the pitchforks to go after someone like Helmsley have decided that anything that Trump does -- even shifting taxes onto The Little People -- is fine by them. For the rest of the country, however, this is what the arrogance of the wealthy looks like. It is why tax evaders are not sympathetic defendants. People do not like paying taxes, but they have no choice; and slick New Yorkers who try to get away with tax evasion are rightly reviled.

The DA's case might not be the sexy bombshell that some people hoped it would be. (Such an indictment might yet be in the works. Who knows?) But what makes the case so interesting is that the legal analysis has virtually no gray areas. TrumpWorld simply decided that the rules do not apply to them. They were wrong.

Prior TaxProf Blog coverage:

https://taxprof.typepad.com/taxprof_blog/2021/07/buchanan-trumpworld-v-those-pesky-pesky-tax-laws.html

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