In 2011, The New York Times published what was, at the time, the most shocking expose on tax policy in decades. General Electric, the largest American corporation, had notched a $14.2 billion profit in the previous year ― and paid no federal income tax.
GE had achieved this financial miracle through creative accounting, ferocious lobbying and years of corporate hiring that lured top tax officials away from just about every government agency, office or committee with jurisdiction over the matter.
The GE story touched off a furious debate by the standards of its day. The company’s defenders took to CNBC to insist that under a more flexible definition of tax liability, GE had paid quite a bit. Others insisted the firm was an outlier and that most corporations were paying plenty of taxes, if not too much.
But critics and admirers alike agreed on one thing: GE’s practices were unusually aggressive, but it hadn’t done anything illegal, in part because GE and its lobbying allies had persuaded Congress and regulators to write rules in the company’s favor.
In the nine years since, public opinion on tax policy has been remarkably consistent. Overwhelming majorities of the public, including large swaths of the Republican Party, think that big corporations and the wealthy should be paying more. And yet the opposite has occurred. In 2013, the Obama administration cut a deal with then-Senate Minority Leader Mitch McConnell to give households making over $250,000 a tax break. And in 2017, President Donald Trump signed into law his signature policy achievement, a sweeping $1.5 trillion tax law that slashed the tax obligations of the rich and large corporations, hacked away at federal revenues and exacerbated economic inequality.
Trump’s tax law has always been deeply unpopular. In March 2019, a survey from the Pew Research Center showed that just 36% of Americans approved of it. A month later, a Monmouth University poll put approval at 34%.
In short, everyone knew the American tax system was a corrupt nightmare before The New York Times released its extraordinary expose on the president’s taxes on Sunday. Its details are breathtaking: Trump didn’t pay taxes at all in 11 of the previous 18 years, paid just $750 a year for the first two years of his presidency, has been living in the shadow of a multimillion-dollar IRS audit for nine years, and appears to be on the verge of financial ruin.
But as stunning as the particulars are, the bigger picture is by now familiar. The Trump family is exactly what the American tax code is designed to create ― an incompetent, intergenerational graft that our government rewards for draining the nation’s resources and destroying social value. Tipping the scales in favor of the rich doesn’t just generate inequality, it creates an inept upper class shielded from the consequences of its errors and granted access to political power.
Trump is not an anomaly. Much of the so-called innovation that drives up corporate share prices amounts to little more than devising ways to stiff workers on their pay, rip off customers, or hide from the tax man. From Uber to offshoring to Wells Fargo’s fake accounts, executives are rewarded for creating inequality.
Even when they get caught actually breaking the law, these oligarchs nevertheless retire on piles of money. Disgraced former Wells Fargo CEO John Stumpf still owns more than $80 million in company stock after collecting $60 million in salary and bonuses over the course of his career and accruing a $22.7 million pension.
In the days since the Times story dropped, reformers have rightly called to increase the enforcement budget of the IRS to give the agency the resources it needs to take on rich fraudsters. Such a boost would be welcome. But the cancer on our democracy cannot be cured with a few appropriations bills. Many of the tax loopholes Trump has been exploiting were enacted with bipartisan support.
“Trump may not be able to get away with it forever. But he got away with it for years, and rode getting away with it to the highest office in the country.”
The IRS began auditing Trump in 2011 ― it knew the deal years before Trump began his presidential run. It doesn’t take nine years to figure out if a tax refund is aboveboard. As the Times story makes clear, some of the trouble appears to lie with the bipartisan Joint Committee on Taxation, which has jurisdiction over multimillion-dollar tax refunds. One of the reasons Trump’s reputation as a businessman survived for so long is because a bipartisan congressional panel couldn’t be bothered to do its job.
One of our two political parties is devoted to celebrating the rich for being rich, while half of the other party wants to do the same. It is a failure of leadership that with a Democratic majority in the House of Representatives, the public is learning about Trump’s tax returns from the Times instead of the House Ways and Means Committee. The effort to release those returns has been tied up in court, but only after seemingly endless foot-dragging from Ways and Means Committee Chairman Richard Neal (D-Mass.), who has prioritized deal-making with the administration over confrontation about corruption.
Trump may not be able to get away with it forever. But he got away with it for years, and rode getting away with it to the highest office in the country, where his political opposition has been reluctant to challenge him on what he has been getting away with.
It’s enough to make you wonder why GE bothers with all the fancy revolving-door accountants. Who, really, would make them pay?
Zach Carter is the author of the New York Times bestseller “The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes,” available from Random House wherever books are sold.