Noah Smith, Columnist

Designing a Tax That Doesn't Reward Failure

Taxing wealth would shift resources to stars like Jeff Bezos from less successful managers like Donald Trump.

October 6, 2016 at 11:30 AM UTC

Noah Smith is a former Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

Give this man a break.
Photographer: Nicole Craine/wireimage/getty images

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Most of us haven’t seen Donald Trump’s tax returns, and we may never get that chance. But one thing we do know, thanks to the New York Times, is that Trump declared a $916 million loss in 1995, mostly likely from his troubled casinos and other businesses.

The revelation has sparked a lot of controversy, as many people are looking for ways that Trump might have exploited loopholes in the system. John Hempton, the chief investment officer of hedge fund Bronte Capital, suggests that Trump may have taken losses that he didn’t really deserve, using a probably legal but ethically dubious technique known as debt parking, in which a shell company created by Trump holds all his debt and never collects it.