New York Times bogus story about Trump’s business profits

A May 8, New York Times (NYT) article declared “Decade in the Red: Trump Tax Shows Over $1 Billion in Business Losses.” The column went on to say that “Newly obtained tax information reveals that from 1985 to 1994, Donald J. Trump’s businesses were in far bleaker condition than was previously known.”

President Trump quickly responded with a tweet saying the column was “highly inaccurate” and tried to explain why. While Trump really does have a legitimate position, he seems to not communicate that position well.

For instance, Trump notes that depreciation expense is used to minimize income tax liability. It is a justifiable expense because it allows for the recovery of a capital investment. This is necessary to ensure that capital is re-invested back into the economy often in ventures that carry large risk.

In other words, suppose a businessperson buys or builds a factory for $100,000. She uses capital that came from income earned after paying income taxes. The IRS says they will allow that person to recover her investment over say a 25-year period at $4,000 year. That capital can be recovered without paying taxes on it, from the profits generated by that factory.

Now suppose the factory generates $3,000 in profit the first year. With no depreciation expense their total…