Dems highlight NYT article on Trump's business losses in 'tax gap' hearing

Dems highlight NYT article on Trump's business losses in 'tax gap' hearing
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Democrats at a hearing on Thursday raised questions about the fairness of the tax system by highlighting a recent New York Times article on President TrumpDonald John TrumpWarren unveils Native American policy plan Live-action 'Mulan' star spurs calls for boycott with support of Hong Kong police Don't let other countries unfairly tax America's most innovative companies MORE's business losses.

During a House Ways and Means Committee hearing about the "tax gap" — the difference between the amount of taxes owed and those paid on time — Democrats asked current and former IRS officials about the article, which said Trump’s tax papers show that he reported more than $1 billion in business losses from 1985 to 1994 and only paid income taxes in two of those years.

Rep. Mike ThompsonCharles (Mike) Michael ThompsonHouse Democrats request sit-down with McConnell to talk guns Democrats raise pressure on McConnell to tackle gun reform 213 Democratic lawmakers call on McConnell to bring up background checks bills MORE (D-Calif.) asked a witness if the tax system is fair given the Times article.


Benjamin Herndon, chief research and analytics officer at the IRS, said he hasn’t seen data to assess the accuracy of the findings in the article, but said that maintaining a fair tax system is a “huge priority” for the IRS and its commissioner, Charles Rettig.

Trump responded to the article's publication by saying on Twitter that “you always wanted to show losses for tax purposes....almost all real estate developers did — and often re-negotiate with banks, it was sport.”

“What words from the president, when we want confidence in our tax system, to declare it ‘sport’ to underreport, to dodge your taxes,” said Rep. Lloyd DoggettLloyd Alton DoggettHere are the 95 Democrats who voted to support impeachment Speaker Pelosi, seize the moment to make history on drug pricing House Democrats sue Treasury to turn over Trump tax returns MORE (D-Texas) at Thursday's hearing.

Rep. Ron KindRonald (Ron) James KindProtect American patients and innovation from a harmful MedTech Tax increase We should repeal the medical device tax on veterans House panel approves bills on tax extenders, expanding tax credits MORE (D-Wis.) asked if there are red flags that the IRS looks for when a taxpayer reports multiple years of large business losses.

Kenneth Wood, a former IRS attorney, said it “happens all the time” that corporations would not pay taxes for several years because they have losses they can carry forward from previous years.

Kind also asked if there are any problems with tax preferences for real estate developers that Congress should examine.

“Sure there are,” Wood replied, noting that the tax code is very complex.

Rep. Bill PascrellWilliam (Bill) James PascrellBottom Line Democrats denounce Trump's attack on Cummings: 'These are not the words of a patriot' Two Democrats vow to press forward on Trump impeachment MORE (D-N.J.) said that Trump “may not have paid taxes he owed” since the president appears to have deducted losses from borrowed money and that he didn’t pay taxes on loan amounts that weren't repaid.

The New Jersey Democrat predicted that if Trump did avoid taxes on unreported income, “Mr. Trump’s base is going to be very angry when they find out that, yeah, they probably have been had.”

“We are paying our fair share, and other people are not,” Pascrell added.

He also criticized the Trump administration for rejecting Democrats’ request for Trump’s tax returns from 2013 to 2018.

“Mr. Trump and his Treasury secretary are stonewalling us, defying the Congress of the United States,” Pascrell said.

Democrats and Republicans at the hearing also debated whether the IRS should receive more funding in order to help close the tax gap. The IRS estimated in 2016 that the average annual tax gap between 2008 and 2010 was $458 billion, adding that an updated estimate is expected in the near future.

Democrats are supportive of boosting the IRS’s budget. They criticized Republicans for significantly cutting the agency’s budget in the early part of this decade.

“We need more resources for the IRS to go after people in doing audits and encouraging voluntary compliance,” said Rep. Tom Suozzi (D-N.Y.).

Witnesses at the hearing said the IRS would benefit from having more resources. J. Russell George, the Treasury inspector general for tax administration, said the IRS had 1,600 fewer revenue officers in 2017 than it did in 2010, and each officer can bring in about $2 million.

That means that the IRS is collecting more than $3 billion less annually due to the staffing decline, George said.

“That’s striking,” he added.

The top Republican on the Ways and Means Committee, Rep. Kevin BradyKevin Patrick BradyRepublicans' rendezvous with reality — their plan is to cut Social Security The Social Security 2100 Act is critical for millennials and small business owners House panel releases documents of presidential tax return request before Trump MORE (R-Texas), criticized the argument that the GOP gutted the IRS, saying cuts were made only when compared to the agency’s all-time peak funding level. He said the agency should focus on using its resources more efficiently.

"Before we discuss funding, let’s take a look at the IRS’s current standing,” Brady said. “The agency does need to continue to show us that it is capable of effectively managing its existing funds.”