Donald Trump business taxes threaten the rule of law for all

It is tempting for critics to react to the bombshell article run in the New York Times by accusing Donald Trump of the crime of tax evasion. It is tempting for his defenders to insist all he did was use legal avoidance tactics available to anyone. The truth lies in the middle.

But this volume of dubious tax positions held by the president threatens the rule of law. The New York Times was clearly careful to not accuse the president of tax evasion. Proving criminal tax fraud, the kind that brought down Al Capone, can be extremely difficult. However, respecting the rule of law is more than simply avoiding criminal moves. It means abiding by our societal duties without seeking to game the system.

The tax positions are from small amounts to millions of dollars. Some of these are easy to follow and almost comical, such as the $70,000 for his hairstyling during “The Apprentice” years. The Internal Revenue Service and courts have stated that personal care expenses are not deductible even if necessary for an employer. Any soldier cannot deduct the cost when he pays for a haircut to comply with military rules.

The president sets an insulting and dangerous precedent when he does it. He brags about avoiding taxes, but all he does is take risks which ordinary Americans, who cannot afford aggressive advisers and attorneys who can fight the Internal Revenue Service, are unable to handle. He acts like there are different tax codes of the wealthy and everyone else.

Business owners can deduct litigation costs related to their operation, for instance the trademark dispute, but not the costs to run for public office. Trump appears to have done that by deducting costs associated with the investigation of Russian contacts for the 2016 campaign.

Under his signature tax cuts, individuals can deduct $10,000 in state and local taxes a year, while business owners face no such limits. Since 2014, he has deducted more than $2 million on an estate in New York known as Seven Springs by claiming he owns it solely for investment purposes. But a business website for Seven Springs has described it as a “retreat for the family” and his sons have also referred to it as their own.

Suspicion also mars a deduction of $26 million in consulting fees. In some cases, third parties who worked on his projects cannot recall consultants. In other cases, the fees went to his daughter, who also took a salary from the Trump Organization for her time on the projects. It is hard to tell what motivated treating the transfers as consulting fees. However, the Internal Revenue Service challenges filers who use similar tactics.

His attorneys would likely argue that his tax positions are reasonable and do not count as tax evasion. Maybe one can argue that incurring civil tax penalties instead of criminal charges would mean that the president still broke the law even if he did not commit an illegal action. However, to the millions of Americans who pay their taxes each year without trying to get away with anything, it is a distinction without a difference.

The president is the chief law enforcement officer. Abiding by the tax law should mean more than complying with it by adopting his watered down version of duties. It should mean complying with the full spirit of the law. Jimmy Carter knew this so well that he voluntarily contributed $6,000 to the Treasury after he owed nothing for 1977. Historian Joseph Thorndike said that was after finding several ways to pay something.

Yet Trump searches for ways to push the limits. The New York Times article makes clear that he spent the last two decades trying to see how much he can bend the boundaries of the tax law without breaking them. Trump has taken aggressive tax positions and thumbs his nose at those who do their best to pay what they owe. It encourages others to game the system and makes Americans doubt whether the codes for this country are the same for all of us. For a president, stretching the rule of law until it breaks is as dangerous as flouting federal codes with criminal action.

Miranda Perry Fleischer is a professor who focuses on federal tax law with University of San Diego Law School and member of Checks and Balances.