Trump’s "I Win" Tax Form

Presidential hopeful and real estate mogul, Donald Trump, is known for his informal and crude style.  If you ask him, he just says it like it is and leaves out the fluff.  If elected to be the next president, he will apparently be leaving out the fluff on IRS tax forms as well.  In describing his tax plan, he suggested that there will be relaxed filing requirements for individual taxpayers who earn less than $25,000 and married taxpayers who earn less than $50,000. Those who fall into this group would not pay taxes under Trump’s tax plan. Not only would they be exempt from paying taxes, but it appears that they would enjoy some kind of exemption from filing taxes as well. Instead of the regular Form 1040 income tax return, these economically disadvantaged households would simply send in their one-page form to the IRS stating “I win.”

I realize that Trump was speaking figuratively in referring to this “I win” form, but part of me would love to see something like that.  Would it come with instructions like most other IRS forms? The instructions might read something like this: “If you earn less than $25,000 (individual) or $50,000 (couples) then you win.  If you win, sign and date the form.” How refreshing it would be to see something so simple and straightforward in the IRS’ document library. Would the font be huge in an attempt to fill the page? Or would they use a standard size font so as to allow room for some cute graphics or a head shot of the Donald? The new “I win” form would certainly pose some new kinds of challenges and questions for the IRS.

All joking aside, doesn’t this comment show that Trump is way out of touch with reality — at least on a subconscious level? To him the biggest win he can imagine is avoiding taxes and keeping a bigger share of his earnings. But ask some of those trying to survive on $25,000 per year if they think they are winning. I’m not sure they would agree.

Trump’s tax plan would also include capping the tax rate for businesses at 15 percent. And the highest effective tax rate would be reduced from nearly 40 percent to 25 percent for individuals. By limiting the number of exemptions wealthy taxpayers can claim, Trump says they (he) will pay higher taxes. But some experts believe that will not be the result given the tax rate reductions he is proposing.

The Tax Collection Pendulum

They say that clothing fashions tend to repeat themselves over time.  My 20-year-old Metallica T-shirt?  Retro.  Grandma’s 70-year-old dress? Vintage.

Much like the inner-workings of the IRS, right?  Yeah, sort of.  Anyone who has worked in the tax relief industry long enough has seen IRS collection efforts intensify and diminish in repeating cycles over the years.  Well, some believe that the IRS audit pendulum is tipped one way or another depending on the political party of the president.  And I think it’s safe to say that more audits means more revenue collected.

According to the 2005 dissertation by Valentin Estévez at the University of Chicago:

  • Under Democratic presidencies the audit rate of income tax returns is higher than under Republican presidencies even after the inclusion of various political and economic controls.
  • But, during Democratic presidencies the I.R.S. tends to audit fewer individual returns and more corporate returns than during Republican presidencies.

Casey Mulligan, New York Times blogger, agrees.  In fact, he claims that IRS statistics released since 2005 have further supported Estévez’ position.  See full story here.