Trump, Clinton and taxes: saving money the American way

U.S. Democratic Presidential candidate Hillary Clinton speaks at the American Federation of State, County and Municipal Employees convention in Las Vegas

According to Hillary Clinton, Donald Trump “abuses power and games the system” by declaring a $916 million loss on his 1995 income tax returns that could be used to avoid future federal income taxes.

But let’s get real here. The Clintons have taken advantage of tax laws to minimize their taxes, too.

According to their 2015 federal tax return, Hillary Clinton reported earning $1,475,500 in speaking fees. To reduce the amount of those earnings, and the amount of taxes owed, she claimed:

  • $93,073 in expenses for commissions and fees
  • $25,000 for taxes and fees
  • $231,498 for travel
  • $1,281 for deductible meals and entertainment
  • $460 for utilities

By claiming these deductions, Hillary Clinton reduced her taxable income from speaking by a total of $352,257.

Bill Clinton took advantage of tax laws to reduce his taxable income, too.

He reported earning $5,250,000 in speaking fees in 2015. To reduce the amount of those earnings, and the amount of taxes owed, Bill Clinton claimed:

  • $359,703 in expenses for commissions and fees
  • $25,000 for taxes and licenses
  • $445,654 for travel
  • $4,155 for deductible meals and entertainment

By claiming these deductions, Bill Clinton reduced his taxable income from speaking by a total of $834,512.

Bill Clinton also reported consulting income of $1,660, 575 in 2015, from which he deducted $84,234 in expenses in order to reduce his taxable income.

The Clinton’s also claimed a long-term capital loss carryover of $699,540, generating a net long-term capital loss of that amount.

In addition, the Clintons took advantage of allowed deductions for charitable contributions. In 2015, they claimed a deduction of $1,042,000 donations for charitable to the Clinton Family Foundation, a non-profit that was formed in 2002 and serves as a philanthropic vehicle for the Clinton family.

The Clintons have also been aggressive in estate planning steps that will minimize taxes. According to Money magazine, they’ve established property and insurance trusts that ensure that, after they die, at least some of their millions of dollars in assets will be shielded from the estate tax.

Money has reported that one way the couple has chosen to limit the tax hit on their estate is via residence trusts, which prevent any growth in the property’s value from being counted in the couple’s estate — and, therefore, from being taxed when passed along to heirs.

The Clintons established two such trusts in 2010 and shifted ownership of their home in Chappaqua, N.Y., into them the following year. If the value of their home continues to grow, the move could save their estate hundreds of thousands of dollars in taxes.

So before media and Clinton denunciations of Trump for his tax practices get totally out of hand, let’s remember that tax avoidance is not only common, but respectable.

Even the New York Times, which broke the story on Trump’s tax returns and has editorialized against Trump’s actions, paid no income tax for 2014 and got a $3.5 million refund, despite a pre-tax profit of $29.9 million, Forbes has reported.

As Judge Learned Hand so famously said:

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

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