Donald Trump unapologetically boasts that he fully exploits the tax code. He wants to pay as little as possible to the government. “I mean, I pay as little as possible. I use every single thing in the book. And I have great people,” he said. Trump has not released his tax returns, though now he says he is “working on” it.
“This is not, like, a normal tax return,” he said. “I have big returns, as you know, and I have everything all approved and very beautiful and we’ll be working that over in the next period of time, you’ll be very satisfied.” “I try to pay as little tax as possible, because I hate what they do with my tax money,” Trump said on “Meet the Press.” “I hate the way they spend our money, the way they give it to Iraq, the way they give it to Iran.”
Who can forget Mitt Romney’s stumbles over taxes. Trump mocked R0mney’s flubs, saying that paying as little as possible is right: ”That’s the American way. I mean, do you want stupid people?” He manages to sound a little like Gordon Gekko and Warren Buffett. And oddly enough, he sounds a little like Bono, the U2 frontman and megastar, who transcends music, geopolitics and downright coolness.
Bono saves Africans, does rakish ads for Louis Vuitton, and hobnobs with Presidents. But in the past he has faced criticism over thwarting Irish efforts to collect taxes on U2′s music income. By 2013, though, he had his tax mojo, defending U2′s tax set-up:
It is not an intellectually rigorous position unless you understand that at the heart of the Irish economy has always been the philosophy of tax competitiveness. Tax competitiveness has taken our country out of poverty. People in the revenue accept that if you engage in that policy then some people are going to go out, and some people are coming in. It has been a successful policy. On the cranky left that is very annoying, I can see that. But tax competitiveness is why Ireland has stayed afloat. When the Germans tried to impose a different tax regime on the country in exchange for a bailout, the taoiseach said they would rather not have the bailout. So U2 is in total harmony with our government’s philosophy.”
U2 morphed into a quasi-Dutch band for tax purposes when taxes were too high in Ireland. The shrewd move for U2′s music publishing revenue sliced millions off their taxes by moving their assets out of Ireland. In America, perhaps everyone does it. In fact, you might be some kind of a chump if you don’t. U2 makes Mitt Romney’s private equity sandbox look provincial. At one time, the Irish Examiner claimed that U2 has accumulated a net worth of over a billion dollars.
In America, 8 out of 10 people believe you should do everything you can to pay the lowest tax rate possible, according to a Washington Post-ABC News poll. Warren Buffett’s tax savvy is legendary. Mr. Buffett plans transactions efficiently to cut taxes to the bone, arranging deals that are tax-efficient. He has charted Berkshire Hathaway through deals that are tax free in whole or in part. In fact, shrewd business deals that deftly avoid taxes are a kind of trademark for the billionaire.
Berkshire turned over $4.7 billion in Procter & Gamble stock in exchange for its Duracell battery business. The latter got a $1.7 billion cash infusion. Normally, selling stock is taxed, but this deal sold without selling. The tax savings were probably over $1 billion. Then there was the early 2014 deal in which Berkshire swapped shares in Phillips 66 for its pipeline-flow business.
These are exchanges of shares structured as a tax-free reorganizations. Mr. Buffett deftly sidesteps taxes, and yet also manages to avoid flack for doing deals that seem to contradict his “raise my taxes” mantra. When you consider that many small business sales involve paying one or even two layers of tax exceeding 50%, many a small business could learn something from Mr. Buffett’s example. As for Mr. Trump, he should aspire to be as effective and as admired as Mr. Buffett.
For alerts to tax articles, email me at Wood@WoodLLP.com. This article is not legal advice.
via The Tax Lawyer http://ift.tt/1ORUS83