The New York Times has reported that lots of Donald Trump’s wealth came from ‘dubious tax schemes… including instances of outright fraud’
What it means: Economists have lots of different opinions about tax. Governments usually think they’re the best way to pay for public goods - the stuff everybody uses but which are difficult to charge for by use, like motorways and clean air and national defense. Some people think high taxes on wealth are the best way to create a more equal society. Other people think low taxes encourage people to work hard and build businesses, both of which will pump more money into the economy for everybody to enjoy.
Donald Trump also has lots of different opinions on tax. He thinks it should be high for foreign stuff being sold in America, and higher still if the foreign stuff is Chinese. (FYI, these sort of taxes are called tariffs). But he apparently thinks it should be very, very low for stuff owned by him and his family.
The New York Times says that Trump lied about being a self-made billionaire (shock) and that he actually got millions of dollars from his father. It also says that most of this inherited wealth was given to him via dodgy tax deals. Trump set up a fake company so his parents could disguise the money they were gifting him as business payments (which are taxed less). He helped his dad get tax reductions that he wasn’t allowed to have. And he told the IRS (America’s tax collection authority) that the properties he inherited were worth 16x less than they actually were (you’re taxed on the value of your inheritance).
Overall, the money Trump’s parents gave him and his siblings should have been charged tax of $550 million, which is 55 percent of the total. They paid just $52.2million, which is about 5 percent. That means the US government had less money to spend on things like welfare, defence, education and infrastructure. Trump (who says the New York Times is lying) is far from the only rich person to pay less tax than the law says they should. But he is the only one who holds the most powerful government job in the most powerful country in the world.
