If this is the big pre-debate 'gotcha' that the Democrats and their allies in Big Media had in mind, it’s a bit of a flop. //

The New York Times published an article Sunday evening analyzing several years of tax returns filed by President Donald Trump. This illegal leak of the president’s tax returns revealed nothing we didn’t already know about the Trump business hydra: It is complicated, has a lot of expenses that generate tax deductions, and hires very smart tax advisers to make the whole thing work with as low a legal tax liability as possible. If that sounds familiar, it’s because the Democrats also tried this line of attack against Trump in the 2016 debates.

Because most media will breeze over it, it’s important to pause and note the criminal illegality of this story. It is a federal crime for any federal, state, or local government employee to release a tax return without the consent of the taxpayer. Ditto for tax lawyers, CPAs, enrolled agents, and other tax professionals. Interestingly, it’s also illegal to print or publish tax returns or information from them. Section 7213 of the Internal Revenue Code prescribes that each violation here is a felony punishable by $5,000 and/or five years in federal prison, plus the cost of prosecution. Federal employees so convicted are to lose their jobs. //

Turning to the particulars of the tax return, there simply isn’t much here. There’s certainly no smoking gun, nothing that on its face is illegal in some way. The portrait that emerges is one of a very aggressive, wheeler-dealer businessman with a thousand fingers in a thousand pies. Trump allocates money in a wide array of business ventures, generating tax deductions that offset income from these and other enterprises.

Trump himself in the piece describes his approach as “truthful hyperbole,” which is one of those wonderful phrases like “trust but verify,” “non-denial denial,” and “unknown unknowns.” In this case, the phrase tells me, as someone who has had all sorts of tax clients over the years, that the president loves the game. He is always looking for his next business venture and wants to plow all his profits from other lines of work into the next chapter of his life. //

The bottom line is that the Trump business empire is basically a closed circuit — profits from business A are used to prop up business B and acquire business C. That creates a lot of deductions that offset the profit, which in turn means that in some years, very little tax is owed.

Does that make Trump a tax cheat? Not by itself, certainly. The IRS or other tax authorities are of course free to challenge the legality of this capital loss or that consulting expense, but that’s a matter of analyzing facts and circumstances case by case. There’s nothing wrong with taking these deductions in and of themselves. These types of news stories tend to cherry-pick particular tax years and tax deductions that fit the narrative and ignore high tax payment years that do not. //

Here is where the story really falls down. It does not inform the reader about the crucial distinction between tax evasion (illegally misrepresenting income and deductions to fraudulently lessen tax liability) and tax avoidance (legally using available deductions and other tax benefits to legitimately lessen tax liability). This difference is the axle upon which the entire story turns.

Unfortunately for the New York Times, all it has managed to uncover is a very aggressive taxpayer working with a very talented team of tax professionals pushing every legal tax avoidance strategy they can muster. God bless them for it. //

Businesses can and should deduct all ordinary and necessary expenses against business revenue to arrive at business profit — period, end of story. To deny this is to implicitly endorse a gross receipts tax on business income, something tax experts of all persuasions will tell you is the singularly most unfair way to tax businesses.