The media has framed Trumps tax as a genius method of working the intricate details of the tax code. And that he has therefore somehow weasled out of paying his fair share. Balderdash! Let me explain.
It is nothing of the sort. It one of the most basic principle of business tax law and it is based in fairness of recognition of the vital importance of people taking risks with their own money to try and start companies, that create jobs, products, national wealth. It is called LTCG Long Term Capital Gains, and the accompanying Long Term Capital Losses.
To encourage job creation, national wealth creation, the tax code encourages people to take risks with their own money, and start companies. If those companies have a bad year or years, those are Long Term Capital Losses. And they can offset future profit. So there is a benefit for taking the risk to start that company, and to run it.
And there is an encouragement, after a big loss, you can drive forward, knowing that if somehow you are able to make a profit again….you will get to keep the whole profit. It’s a big motivator, I can tell you, I have lived the fact of running a company through the peak horror years of the 21th century depression.