If a doctor of oncology treats a thousand patients, but five hundred of them die, is he still a good doctor?

If a preacher saves a thousand souls but one hundred end up in hell is he still a good preacher?

If a film producer makes twenty films that win academy awards, but also makes five box office bombs is he still a great film producer?

If an equity manager buys twenty stocks that on average triple in value but also buys three stocks that go bankrupt is he still a good equity manager?

If an entrepreneur starts forty companies, but four of them file bankruptcy is he still a successful entrepreneur?

Life is full of risks and failures are a part of the deal.  The American culture embraces failure as part of the path to success in a way few cultures can emulate. It is the secret to our success. It is the reason Facebook, Amazon, Google, Apple, IBM, Boeing and thousands of other ground breaking companies start in this country in spite of our inequality (maybe because of it) and the declining quality of our educational system.  It is the reason that over 40% of the Nobel prizes are awarded to Americans regardless if where they came from.

And this is not because of the hyper regulatory state, but in spite of it.  Yes, our institutions provided protections for property rights and our bankruptcy code was designed to recognize failures quickly and reallocate the capital to better uses.  The fastest growing industries are often those that happened so fast that the regulators failed to recognize their significance in time to apply the soul and spirit killing regulations that would have killed them at birth, or partial birth.

The venture capitalists, the shareholders, the employees, the customers and the entrepreneurs know precisely who built those companies and it was not Elizabeth Warren, President Obama or Hillary Clinton.

The controversy over Trumps tax loss carry forwards displays how ignorant the left is about what creates wealth in this country.  Trump lost money in a recession in the casino business in Atlantic City. Does anybody remember how cheap hotel rooms were in Las Vegas in 2009?  Does anybody think that anyone should pay income taxes on a business that loses money in a reporting period? Does anybody think that losses in one period should not be allowed to offset profits in another period?  If I make $1000 on one stock and lose $1000 on another stock and I sell them both at the same time should I owe any taxes on the two transactions?

To make Trumps tax losses appear to be either illegal or even unethical is pandering to ignorance.  Trump is no genius because he used losses to offset subsequent profits?  Anybody with an accountant that can pass the CPA exam would do the same thing.  There is nothing sinister, illegal, or in even incompetent in doing so.

If you want to find sinister examine the profits of a couple who made over $100 million dollars in a decade with nothing but political connections.  Examine the same couple who deducted a million dollars to their own foundation which paid less than 10% to charitable recipients, often in the form of lucrative contracts to their cronies, while they kept her political staff on the payroll until her campaign started, and spent millions flying them around the world in private jets.  Examine the ex President who got $18 million in pay from a private for profit school while a competitive school was shut down by the government. Examine the ex Secretary of State who collected $15 million in speaking fees, including $225 thousand addressing a college where she noted, get this now, the high cost of college.

How isolated in a bubble can one get to make such accusations?  How tone deaf can one become?  How ignorant does one think the voters are to buy this malarkey?  How ignorant are the voters and the media to accept it without asking questions any first year accounting student could answer?

Bret Stephens in the Wall Street Journal (The Apology of Donald Trump)  accurately notes that this is why she is not 50 points ahead.  As Doc Holiday (wonderfully played by Val Kilmer) in the movie Tombstone said, “hypocrisy knows no bounds.”


Economist and blogger John Cochrane in The Grumpy Economist offers a more thorough analysis in Trump Taxes.The tax code is complicated and there are certainly other tools Trump may have used other than mere tax loss carry forwards. Cochrane uses the story to make the case for a consumption tax.

While normal tax compliance may have reduced Trump’s income tax, his enterprises are still paying property taxes (unless the local and state authorities exempted him, which they sometimes do to spur development), sales taxes, and payroll taxes.

From Holman Jenkins at The WSJ, in Harmonize this Eurocrats,   (posted nearby)

Companies receive their revenues from their customers and distribute them to their suppliers, investors and employees. Thus corporate taxes can be eliminated in complete comfort that the revenue will pop up elsewhere as taxable personal income or taxable consumption expenditure.

The only real function of a corporate income tax is non-transparency. Taxing a company is a way for politicians to pretend they are not taxing any actual voter to pay for programs that voters find desirable as long as they seem not to come with a price tag.

Drop the pretense that citizens don’t have to pay for the amenities they want, and real harmonization becomes possible: