Donald Trump and Federal Income Taxes: Perspective

By, Jake Foote

In the first presidential debate, Republican candidate Donald Trump asserted that he was "smart" for not paying federal income taxes.

This statement has raised many questions about the legality and moral viability of the practice especially since many people believe the job of enforcing federal income tax falls under the responsibilities of the president.

According to Brian Friedman, co-founder of Friedman Capital and adjunct instructor at Georgetown University, Trump is operating well within the law when not paying his federal income taxes.

"Anyone can take advantage of the tax code," said Friedman.

Entrepreneurs can often be the biggest benefactors of the way this system can be used. Friedman's example describes an entrepreneur, in this case his brother, who made an investment to start his business.

Friedman's brother paid $20,000 for a piece of equipment to further the development of his business, but only generated $15,000 of revenue in the first year leaving the business at a $5,000 loss.

The entrepreneur is able to carry this loss forward and because they are technically in the red, they will have little to no taxes to pay.

Trump's example is on a much larger scale. His real-estate profile became worth around 10 billion dollars, but fell to bankruptcy multiple times allowing him to carry huge amounts of loss forward.

The full extent of Trump's tax abuses remains to be seen and could be further clarified by the release of more detailed tax return information.