Evil Tax Deduction for Trump Businesses

The Wall Street Journal has decided to put its collected knickers in a twist over a Trump tax-overhaul proposal that would preserve millions of dollars in savings for companies controlled by his family.  True.  His proposal would preserve the ability of companies to take a tax deduction for interest payments on company debt.

Companies that are part of the Trump Organization pay more than $20 million a year in interest on their debts, according to a Wall Street Journal analysis of financial disclosures and other public information about the companies’ outstanding loans and their interest rates.

The Journal‘s estimate of $20 million is conservative, meaning Mr Trump’s or his companies’ tax savings from being able to deduct interest payments from taxable income might be higher.

The horror.

Such deductions reduce the amounts companies owe to the government.

The horror.  The horror.

Carefully ignored by the WSJ is the fact that all businesses with debt-based interest payments would save tons of money from such a deduction. The $20M (or more) the WSJ claims to have identified for Trump’s businesses is chump change compared to that national-level total.

Whether debt interest payments should be deductible is a separate argument.  I think they should not because I think there should be no deductions, credits, what-have-you; income should be taxed (at a single, low rate) without special treatments for this or that source.  Our tax code should not be in the social engineering business at all.

That such deductions reduce the amounts owed to the government is a good thing.  The money is more efficiently, more intelligently, allocated by private citizens in the private economy than any government can hope to do.

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