How Biden would tax Trump

A President Biden may not back a wealth tax, but he could find ways to make life less rich for Trump’s heirs

- By Ben Steverman

Money can arrive in many forms—paychecks, invoices paid, dividends from a business you own, a gift from Dad, a loan from Mom, rising property values or stock prices. Even nonmonetary perks like housing, plane rides, and haircuts have a cash value. Much of this income—and let’s call it all income, though the lawyers might quibble—never gets taxed. With your paycheck, of course, the government takes its cut immediately. Plumbers and Uber drivers who don’t set aside money for the Internal Revenue Service will regret it. But for others, different rules apply.

In a now-infamous—though hardly unique—example, Donald Trump paid just $750 in federal income tax in 2016 and the same amount in 2017, his first year as president, according to a report by the New York Times, which obtained copies of his tax returns. Trump reported massive losses from his businesses, effectively wiping out all income tax owed in 10 of the previous 15 years as well. That’s despite a net worth estimated at $2.7 billion by the Bloomberg Billionaires Index.

Rich Americans and a small army of sophisticated advisers have perfected the art of tax avoidance: Wealthy families set up complex trusts, private pensions, and life insurance schemes to lower their taxes. Silicon Valley startups valued in the billions of dollars grab tax breaks meant for small businesses. Multinational corporations shift profits to overseas tax havens. Add it up and, according to one estimate, billionaires now pay lower overall tax rates than working-class Americans hovering above the poverty line.